Zero Hedge - Germanyhttp://www.zerohedge.com/taxonomy/term/8300/0
enThe Great Greek Fudgehttp://www.zerohedge.com/news/2015-08-01/great-greek-fudge
<p><em>Submitted by Pieter Cleppe of <a href="http://openeurope.org.uk/">Open Europe</a></em><a href="http://openeurope.org.uk/"></a></p>
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<p><strong>The Great Greek Fudge</strong></p>
<p><em><strong>A third Greek bailout involving loans from the European Stability Mechanism (ESM), the eurozone’s bailout scheme, is now being negotiated. The start was quite rocky, with haggling over the precise <a href="http://www.theguardian.com/business/2015/jul/24/greek-debt-crisis-talks-stall-hotel-choice">location </a>in Athens where negotiations need to take place and Greek officials once <a href="https://twitter.com/russian_market/status/626676565267623936">again withholding information </a>to creditors. Therefore, few still believe that it will be possible to conclude a deal in time for Greece to repay <a href="https://twitter.com/russian_market/status/626676565267623936">3.2 billion euro</a> to the ECB on 20 August. Several national Parliaments in the Eurozone would need to approve a final deal, which would necessitate calling their members back from recess around two&nbsp; weeks before the 20th, so it’s weird that French EU Commissioner Pierre Moscovici still <a href="http://www.ft.com/intl/fastft/351421/pierre-moscovici-deal-with-greece-not-too-late">seems </a>so confident that the deadline can be met.</strong></em></p>
<p><strong>If indeed there is no deal, Greece is likely to request a second so-called “bridge loan” to allow it to pay the ECB, firmly within the Eurozone tradition of the creditor providing the debtor cash in order to pay back the creditor</strong>. France, which is most eager to keep Greece inside the Eurozone, is afraid that bilateral bridge loans from Eurozone countries wouldn’t be approved by the more critical member states, as this would risk France having to foot this bill on its own, perhaps with Italy. Not exactly a rosy prospect for socialist French President Hollande, who’s already struggling to contain the far right anti-euro formation Front National.</p>
<p>The only European fund practically available to provide a bridge loan is the European Financial Stabilisation Mechanism (EFSM), a fund created in May 2010, which has been raising 60 billion euro on the markets, with the EU’s €1 trillion Budget as collateral. The EFSM belongs not just to Eurozone member states, but to all EU member states. How on earth did the UK, which isn’t part of the Eurozone, agree to bail it out in 2010, one may wonder? The reason is that the decision to create the EFSM was taking precisely at the time of the power vacuum in the UK. Labour had just lost the election and the Conservatives were still busy negotiating a coalition with the Lib Dems. Outgoing Labour Chancellor Alistair Darling <a href="http://researchbriefings.files.parliament.uk/documents/SN05973/SN05973.pdf">claimed</a> to have “consulted” likely new Chancellor George Osborne, but it remains muddy who precisely gave the expensive OK. In order to correct this, PM Cameron <a href="http://openeurope.org.uk/blog/will-the-eu-regret-dragging-the-uk-into-greek-bailout/#.VaZi-Cc0E94.twitter">secured</a> a declaration from other EU leaders in December 2010 that the fund wasn’t going to be used any longer, until it was used after all, in July 2015, to provide Greece with a first bridge loan. Then not only the UK, but also the Czech Republic and Poland protested heavily, only backing down when they secured special <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/07/17-eurogroup-statement-greece/">guarantees</a> against possible losses and a commitment that it would be illegal in the future to provide loans to Eurozone countries with the EFSM without also providing such guarantees to non-euro states.</p>
<p>EU Finance Ministers are currently busy implementing the legal change, through a “written procedure”, which <a href="https://twitter.com/ElodieLamer/status/626026190399213568">should</a> be finalized before the middle of August. The Council <a href="http://www.consilium.europa.eu/en/press/press-releases/2015/07/17-eurogroup-statement-greece/">declared</a> in July that an “agreement” on this legal change was needed “in any case before” Greece can request a second bridge loan. Another “written procedure” is needed for that, but it’s unlikely that Finance Ministers will manage to decide this in smoke-filled rooms. With Polish elections coming up on 25 October, local opposition parties may <a href="http://www.rp.pl/artykul/1216114.html?print=tak&amp;p=0">once again</a> rail against Polish PM Ewa Kopacz, who promised voters they wouldn’t be exposed to this. Also the UK may use this as an opportunity to extract concessions related to its own agenda for EU reform. Perhaps the French government’s sudden openness to this agenda and its welcome stance that “we need a fair treatment of the ‘out’ countries” may have been linked to the British approval for a first bridge loan.</p>
<p>As always in the Eurozone, the safest bet is on another fudge, at least when it comes to the bridge loan.</p>
<p><strong>More questionable is how the IMF’s </strong><a href="http://openeurope.org.uk/daily-shakeup/schaubles-proposals-to-restructure-commission-receive-mixed-response-in-germany/#section-2"><strong>statement</strong></a><strong> that it “cannot reach staff-level agreement [to participate to a third Greek bailout] at this stage” will play out, given that Greece no longer meets two of the four IMF criteria for a bailout: ability/willingness to implement reform and debt sustainability.</strong> It will only decide whether to take part in the bailout after Greece has “agreed on a comprehensive set of reforms” and after the Eurozone has “agreed on debt relief”, meaning it may even only join next year or not at all, of course. This is a problem, given that a number of Eurozone states, especially Germany and the Netherlands, have explicitly linked their willingness for a third Greek bailout to participation by the IMF. Former EU Commissioner for Monetary Affairs Olli Rehn has <a href="https://twitter.com/pietercleppe/status/621358142002216960">suggested</a> that many countries demand IMF involvement in bailouts because they don’t trust the Commission.</p>
<p>It’s not entirely clear what will be sufficient for the IMF: its President, Christine Lagarde, has discussed a <a href="http://www.wsj.com/articles/grexit-favored-by-many-members-of-german-government-says-schauble-1436877063">write-down</a> on the value of the country’s debt but <a href="http://www.wsj.com/articles/imf-to-take-part-in-greek-bailout-if-it-includes-debt-restructuring-1437117045">ruled out</a> a straight “haircut”, while <a href="http://www.wsj.com/articles/imf-to-take-part-in-greek-bailout-if-it-includes-debt-restructuring-1437117045">mentioning</a> an extension of debt maturities, an extension of grace periods and a maximum reduction of interest rates. The IMF carries the legacy of its former Director Dominique Strauss-Kahn, who managed to overcome opposition within the fund against taking part in the first Greek bailout in 2010. The IMF only issues loans to countries when there is prospect for debt sustainability, which clearly wasn’t the case for Greece in 2010, but the interests of supposedly “systemic” banks were considered to be more important. Now the IMF, which has <a href="http://www.npr.org/2012/02/03/146327391/why-imf-loans-always-get-repaid">never taken</a> straight losses on loans it has issued, may be experiencing this in case of Grexit.</p>
<p><strong>As opposed to the IMF, which has completely ruled out the idea of taking losses on its lending to Greece, and contrary to the picture painted by some, Germany has made some noices suggesting it may be open to cutting its losses in Greece</strong>. German Chancellor Merkel has not only been <a href="http://www.bloomberg.com/news/articles/2015-07-23/lagarde-push-for-greece-debt-relief-sets-up-showdown-with-merkel">open</a> to extending debt maturities and lowering interest rates, but her Finance Minister Wolfgang Schäuble has <a href="http://www.dw.com/en/grexit-could-be-the-best-way-forward-sch%C3%A4uble/a-18586852">said that</a> “if you think the best way for Greece” is debt relief, then “the best way forward” is to leave the euro, <a href="http://www.spiegel.de/wirtschaft/soziales/griechenland-wolfgang-schaeuble-fordert-erneut-grexit-auf-zeit-a-1043917.html">adding</a> <a href="http://www.handelsblatt.com/politik/deutschland/finanzkrise-in-griechenland-schuldenerlass-gegen-euro-austritt/11172754.html">that</a> “a real debt haircut isn’t compatible with the membership of the currency union”. So Germany is willing to accept debt relief, if there is Grexit.</p>
<p>Some have questioned Schäuble’s claim that debt relief wouldn’t be legally banned within the eurozone, as for example Financial Times columnist Wolfgang Munchau, who recently <a href="http://www.ft.com/cms/s/0/e903ad46-3201-11e5-8873-775ba7c2ea3d.html#ixzz3h7ypXUKL">wrote</a>: “In its landmark&nbsp;<a href="http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62012CJ0370">Pringle ruling</a>&nbsp;— relating to an Irish case in 2012 — the European Court of Justice (ECJ) said bailouts are fine, even under Article 125, as long as the purpose of the bailout is to render the fiscal position of the recipient country sustainable in the long run.”</p>
<p>This sounds a bit like a stretch. The ESM is very much conceived as a “European IMF”, hence the ECJ’s use of the term “sustainable”, reminiscent of the IMF’s condition to provide cash. Just like the IMF, the ESM has been set up to issue “loans”, not to provide “transfers”. Obviously, a loan with an artificially low interest rate partly counts as a “transfer”, but even for the rather <a href="http://www.theguardian.com/law/2010/aug/10/european-court-justice-legal-political">politicized</a> judges of the European Court of Justice there is an end to stretching the meaning of words.</p>
<p>Therefore, apart from the case where the ECJ would completely remove the meaning of the words of its previous rulings and the ESM Treaty, EU law doesn’t allow the “loans” made to Greece to just be forgiven, as much as proponents of a Eurozone transfer union like Mr. Munchau may regret this.</p>
<p>After PM Tsipras <a href="http://openeurope.org.uk/daily-shakeup/schaubles-proposals-to-restructure-commission-receive-mixed-response-in-germany/">threatened</a> with an internal referendum in his own left-wing populist Syriza party, it looks like he has secured the necessary domestic support for a third Greek bailout.</p>
<p><strong>Obstacles remain, but much of the protest in “creditor countries” seem to have been overcome</strong>. In Finland, where the coalition was at risk at some point, Foreign Minister Timo Soini has said that it “<a href="http://www.uusisuomi.fi/kotimaa/89878-timo-soini-astui-esiin-jokaiselle-perussuomalaiselle-vaikea-paikka#.VaeU9NbcVa4.twitter">would make no sense</a>” for his Eurosceptic Finns party to leave the Finnish coalition over this. In the Netherlands, the governing VVD party, which is skeptical to the Greek deal, has provided tacit consent for negotiations to start. In Germany, despite all the noice, Merkel enjoys a comfortable majority to get on with the third range of transfers.</p>
<p><strong>The third bailout is </strong><a href="http://www.forbes.com/sites/francescoppola/2015/07/30/the-wheels-are-already-coming-off-the-greek-deal/2/"><strong>likely</strong></a><strong> not to be sufficient to cover all Greek funding needs in the next few years</strong>, also given that expecting 50 billion euro from privatizing Greek state assets looks a little <a href="http://greece.greekreporter.com/2015/07/28/austrian-railways-head-imf-privatization-targets-for-greece-unrealistic/">rosy</a>. This is a problem which can be solved near the end of the bailout period, once Greece has <a href="http://openeurope.org.uk/blog/what-happens-if-greece-does-not-pay-the-imf-on-time/">made it</a> through the difficult year 2015. In 2016 and 2017, the country needs to make debt repayments “only” <a href="http://openeurope.org.uk/blog/what-happens-if-greece-does-not-pay-the-imf-on-time/">amounting</a> to around 6 billion euro each year.</p>
<p>The IMF may in the end just back down and join in, <a href="http://www.forbes.com/sites/francescoppola/2015/07/30/the-wheels-are-already-coming-off-the-greek-deal/3/">given how</a> it already bent its rules twice to agree to Greek bailouts. It would have been expected to provide between 10% and a third of the funding of the new bailout which may amount to 86 billion euro (and possibly more), so if the IMF wouldn’t back down, Germany and France would see their bill for the third bailout <a href="http://openeurope.org.uk/blog/how-could-the-third-greek-bailout-change-without-the-imf/">rise</a> with another 1.7 billion and 1.3 billion euro respectively. A lot will depend on how the IMF will calculate “debt sustainaibility”. Speaking in the Dutch Parliament, Eurogroup chief Jeroen Dijsselbloem <a href="https://twitter.com/OpenEurope/status/621680886183030785">said</a> on 16 July that the Eurozone already “agreed with the IMF to look at “debt service”, not merely at the debt to GDP levels”. In other words: because Greece’s interest burden as a percentage of GDP <a href="http://www.telegraph.co.uk/finance/economics/11372369/Three-myths-about-Greeces-enormous-debt-mountain.html">is even lower than</a> the one carried by Portugal, Italy, Ireland and Spain, one can ignore the fact that its debt to GDP is at the horrendous level of 180% now. This of course overlooks the difficulty to boost that GDP, given the tax hikes and the capital controls which will be hard to remove as a result of the talk about “Grexit”. Still, a fudge looks on the cards.</p>
<p>It <a href="http://vocalinternational.com/?p=1907">isn’t a good idea</a> to let the bill of Eurozone taxpayers grow even bigger, to burden an economy already crippled by debt with even more debt and to intervene deeply into domestic Greek policy choices. Opting for <a href="http://www.zerohedge.com/news/2015-06-26/what-would-happen-case-grexit">Grexit</a> may have been the <a href="http://vocalinternational.com/capx.co/germany-is-not-to-blame-for-the-greek-crisis/">wisest</a> choice for everyone. The opportunity was there, given that many Greeks had already taken their savings out of banks anyway. Also, <a href="http://www.europeanleadershipnetwork.org/why-grexit-is-the-most-likely-outcome_2924.html">many of the reasons</a> to think Greece still may leave the Eurozone, like the difficulty to unwind capital controls, remain in place. We have come close, but Grexit seems to have been avoided for now. But it’s unlikely to have been referred “<a href="https://en.wiktionary.org/wiki/ad_kalendas_Graecas">ad kalendas Graecas</a>”- “until pigs can fly”.</p>
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http://www.zerohedge.com/news/2015-08-01/great-greek-fudge#commentsAlistair DarlingCreditorsCzechDominique Strauss-KahnEurozoneFinlandFranceGermanyGreeceIrelandItalyNetherlandsPolandPortugalSat, 01 Aug 2015 19:03:38 +0000Tyler Durden510933 at http://www.zerohedge.comGreece May Miss ECB Payment As Germany Says Bailout Timeline Is Unrealistichttp://www.zerohedge.com/news/2015-08-01/greece-may-miss-ecb-payment-germany-says-bailout-timeline-unrealistic
<p>Greek PM Alexis Tsipras won a hard fought victory over party rivals on Thursday when Syriza’s central committee voted to postpone an emergency congress until after formal discussions on the country’s third bailout program are complete.&nbsp;</p>
<p>Syriza has been grappling with bitter infighting since more than 30 MPs in Tsipras’ parliamentary coalition defected during a vote on the first set of bailout prior actions, forcing the PM to rely on opposition votes to clear the way for formal discussions with creditors. The party dispute was exacerbated by reports that ex-Energy Minister and incorrigible Grexit proponent Panayiotis Lafazanis (along with several Left Platform co-conspirators) planned to storm the Greek mint and seize the country’s currency reserves.&nbsp;</p>
<p>Fed up, Tsipras told 200 members of Syriza’s central committee on Thursday that essentially, they could either hold a party referendum on the bailout on Sunday or wait until September to sort things out, leading us to note that "were Syriza to vote on whether or not Greece should follow through on the agreement with creditors, the market could be in for an event that is far more dramatic and important than the original referendum."&nbsp;</p>
<p>Lafazanis refused to go along with the idea.<strong> "How many referenda are we going to hold? We’ve already done one and we won with 62 per cent of the vote", he said. </strong>Ultimately, the party approved a September congress. This gives Tsipras some "breathing space," <a href="http://www.ft.com/intl/cms/s/0/bef98f44-36ab-11e5-bdbb-35e55cbae175.html">FT notes</a>, "but Thursday’s highly charged debate signalled that the Left Platform, which supports an end to austerity and a 'Grexit' from the euro, would continue to oppose a fresh bailout."</p>
<p>And the party’s radical leftists aren’t alone in their opposition to the third program for Athens. On Thursday, <a href="http://www.zerohedge.com/news/2015-07-30/lagarde-says-no-imf-aid-greece">FT reported</a> that according to "strictly confidential" minutes from the IMF’s Wednesday board meeting, the Fund will not support the new bailout until the debt relief issue is decided and until it’s clear that Greece "has the institutional and political capacity to implement economic reforms."</p>
<p>Somehow, all of this must be worked out in the next three weeks. Greece must make a €3.2 billion payment to the ECB on August 20 and if the bailout isn’t in place by then, it's either tap the remainder of the funds in the EFSM (which would require still more discussions with the UK and other decidedly unwilling non-euro states) or risk losing ELA which would trigger the complete collapse of not only the Greek economy but the banking sector and then, in short order, the government. The question is whether Germany can be reasonably expected to take it on faith that i) the Greek political situation will not eventually result in Athens walking back its austerity promises, and ii) that the IMF will eventually hold up its end of the deal once Berlin approves some manner of debt re-profiling for the Greeks.&nbsp;</p>
<p>Now, <a href="http://www.focus.de/finanzen/news/staatsverschuldung/griechenland-krise-zeitplan-nicht-zu-halten-berlin-sieht-athen-hilfen-in-gefahr_id_4853359.html">according to Focus magazine</a>, there are questions as to whether the timetable for cementing the bailout agreement is realistic. German lawmakers may now have to postpone a Bundestag vote and Athens has already discussed the possibility of taking a second bridge loan from the EFSM, Focus says. Here’s more (Google translated):</p>
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<p><em>The timetable for the negotiations on a third aid package in favor of Greece is to look for an internal assessment of the federal government any more. According to the already contemplated for mid-August special session of the German Bundestag must be moved, according to government sources in Berlin.</em></p>
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<p><strong><em>The objective pursued by the EU Commission scheduling is too closely knit, criticize experts.This was reported in its latest issue of FOCUS.</em></strong></p>
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<p><em>Accordingly, the negotiations should be completed before August 10.On August 11, the euro zone finance ministers would approve the results before the agreement of other euro countries ratified and approved by the Parliament in Athens.Also, the Bundestag must still approve.</em></p>
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<p><em>Due to delay Greece threatens a serious cash problem.The government in Athens must, at the latest on August 20, 3.2 billion euros, the European Central Bank to transfer (ECB), which should be possible without new loans from the third aid package barely.</em></p>
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<p><strong><em>Therefore already searched in circles of the EU Commission for ways to temporarily raise money from another pot. Speaking here a renewed bailout from the European Financial Stabilisation Mechanism is (EFSM)</em></strong></p>
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<p><em><strong>This is difficult, however, because the EU states will again require an indemnity outside the euro-zone in this case.</strong> As early as September Greece must further loans operate: The International Monetary Fund (IMF) then expected repayments totaling € 1.56 billion in four tranches.In addition, running on 4 September from short-term government bonds in the amount of 1.4 billion euros, which Greece must also refinance.</em></p>
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<p>And here’s the summary from Bloomberg:</p>
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<p><em><strong>German parliament meeting that was considered for mid-August might have to be postponed as European Commission’s schedule for aid talks is "much too tight," </strong>Focus magazine reports, citing unidentified people in German govt.</em></p>
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<p><em>Greece has to pay EU3.2b to the ECB by Aug. 20, which it may not be able to do without third aid package.</em></p>
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<p>In other words, Greece will likely need <strong>yet another bridge loan</strong> from the EFSM and that will once again require the approval of non-euro countries that will, for the second time in a month, be asked to put their taxpayers at risk in order to keep the ill-fated EMU project alive and preserve the now thoroughly discredited notion that the currency union is "indissoluble."&nbsp;</p>
<p>And make no mistake, Greece and its EMU "partners" had better hope things go smoothly after August because one more bridge loan and the EFSM is tapped out, which means Brussels will have to devise some other circular funding mechanism in the event the third program (which is itself nothing more than a dressed up ponzi scheme) isn't in place by September.&nbsp;</p>
<p>Or, summarized in one picture:</p>
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http://www.zerohedge.com/news/2015-08-01/greece-may-miss-ecb-payment-germany-says-bailout-timeline-unrealistic#commentsCreditorsEuropean Central BankGermanyGoogleGreeceInternational Monetary FundSat, 01 Aug 2015 16:00:45 +0000Tyler Durden510908 at http://www.zerohedge.comGerman Government Launches Investigation of Journalists for Treasonhttp://www.zerohedge.com/news/2015-08-01/german-government-launches-investigation-journalists-treason
<p><em><a href="http://libertyblitzkrieg.com/2015/07/31/history-is-repeating-german-government-launches-investigation-of-journalists-for-treason/">Submitted by Mike Krieger via Liberty Blitzkrieg blog</a>,</em></p>
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<p><em>If it were up to the Federal Attorney General and the President of the German Domestic Security Agency, two of our reporters would soon be in prison for at least two years. Today, we were officially informed about investigations against our Markus Beckedahl, Andre Meister and an unknown“ party. The accusation: Treason.</em></p>
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<p>– From Netzpolitik.org: &nbsp;Suspicion of Treason“: Federal Attorney General Announces Investigation Against Us In Addition To Our Sources</p>
<p>Widespread outrage across Germany is erupting following the revelation that the nation’s Attorney General has launched an investigation into treason charges for two journalists working for Netzpolitik.</p>
<p>The charge is treason. The crime is journalism.</p>
<p>We learn from <a href="http://www.theguardian.com/world/2015/jul/31/german-government-accuses-news-website-of-treason-over-leaks">The Guardian</a> that:</p>
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<p><em>Germany has opened a treason investigation into a news website a broadcaster said had reported on plans to increase state surveillance of online communications.</em></p>
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<p><em>German media said it was the first time in more than 50 years journalists had faced treason charges, and some denounced the move as an attack on the freedom of the press.</em></p>
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<p><em>“The federal prosecutor has started an investigation on suspicion of treason into the articles … published on the internet blog Netzpolitik.org,” a spokeswoman for the prosecutor’s office said.&nbsp;</em></p>
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<p><em>The public broadcaster ARD reported Netzpolitik.org had published an article on how the BfV was seeking extra funding to increase its online surveillance, and another about plans to set up a special unit to monitor social media, both based on leaked confidential documents.</em></p>
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<p><em>"This is an attack on the freedom of the press," Netzpolitik.org journalist Andre Meister, targeted by the investigation along with editor-in-chief Markus Beckedahl, said in a statement. "We’re not going to be intimidated by this."</em></p>
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<p>Cory Doctorow at <a href="http://boingboing.net/2015/07/31/german-prosecutors-give-spies.html">Boing Boing</a> accurately notes the shadiness and hypocrisy of it all:</p>
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<p><strong><em>The German prosecutors who dropped all action against the US and UK spy-agencies who trampled German law and put the whole nation, up to and including Chancellor Angela Merkel, under surveillance, have decided instead to open an investigation into the bloggers at Netzpolitik, who revealed the wrongdoing.</em></strong></p>
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<p><strong><em>Netzpolitik are an important source of independent news, analysis and campaigning for privacy and freedom in Germany. This is a genuinely shameful moment for the nation. We stand with Netzpolitik and its supporters around the world.</em></strong></p>
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<p>While this is horrible news, there is a silver lining. The main reason the German government feels a need to go overtly fascist, is because they are scared shitless. They are scared of the truth, of the light and of their own citizens. Such a corrupt and compromised government can’t last very long.</p>
<p>Additionally, we should commend the bravery of the journalists involved. As reported <a href="https://firstlook.org/theintercept/2015/07/31/german-journalists-investigated-treason-publishing-surveillance-leaks/">by the Intercept</a>:</p>
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<p><em>Asked if Netzpolitik would continue to report using materials gained from whistleblowers, Meister replied, "That’s our job, so of course we will continue to report about publicly relevant information, which obviously includes information from whistleblowers from state and private entities. As a matter of fact, just [yesterday] we have exposed the new ‘cyber strategy’ of the German Federal Military ‘Bundeswehr’ about offensive cyber attacks."</em></p>
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<p><em>"If anything, all the support is showing that we must be doing the right thing, so we will continue what we do and maybe even step up the pace. … To paraphrase a Google engineer after yet another NSA leak: 'Fuck those guys!'"</em></p>
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<p>Bravo. These guys deserve our complete and total support.</p>
<p>* &nbsp;* &nbsp;*</p>
<p>For related articles, see:</p>
<p><a href="http://libertyblitzkrieg.com/2014/09/25/standard-poors-warns-on-germany-as-anti-euro-political-party-soars-in-popularity/">Standard &amp; Poor’s Warns on Germany as Anti-Euro Political Party Soars in Popularity</a></p>
<p><a href="http://libertyblitzkrieg.com/2014/06/19/video-of-the-day-end-the-fed-rallies-are-exploding-throughout-germany/">Video of the Day – "End the Fed" Rallies are Exploding Throughout Germany</a></p>
<p><a href="http://libertyblitzkrieg.com/2013/06/07/martin-luther-king-everything-adolf-hitler-did-in-germany-was-legal/">Martin Luther King: "Everything Adolf Hitler did in Germany was Legal"</a></p>
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http://www.zerohedge.com/news/2015-08-01/german-government-launches-investigation-journalists-treason#commentsGermanyGoogleSat, 01 Aug 2015 15:14:00 +0000Tyler Durden510907 at http://www.zerohedge.comChinese Stocks Drop, End Worst Month Since August 2009; US Equity Futures Flathttp://www.zerohedge.com/news/2015-07-31/chinese-stocks-drop-end-worst-month-august-2009-us-equity-futures-flat
<p>In a repeat of Thursday's action, Chinese stocks which had opened about 1% lower, remained underwater for most of the session before attempting a feeble bounce which took the Shanghai Composite fractionally into the green, before the now traditional last hour action which this time failed to maintain the upward momentum and the last day of the month saw a surge in volume which dragged the market to its lows before closing roughly where it opened, -1.13% lower, dragged down by energy and industrial companies. </p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/07/shcomp%207.31.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/07/shcomp%207.31_0.jpg" width="511" height="577" /></a></p>
<p>The drop took place even as 505 companies were still halted on the Shanghai and Shenzhen exchanges on Friday, or 18% of all listings. Energy and industrial stocks dropped before Saturday’s manufacturing data. PetroChina Co., the biggest oil producer, slid 5.3 percent. Air China Ltd. dropped 10 percent; as these companies were among the mostly supported by the government it appears that the Chinese plunge protection team took today off.</p>
<p>This caps the worst month for Chinese stocks since since August 2009, as the government struggles to rekindle investor interest amid a $3.5 trillion rout, one which has sent the Shanghai market lower by 15% - the biggest loss among 93 global benchmark gauges tracked by Bloomberg, as margin traders cashed out and new equity-account openings tumbled amid concern valuations are unsustainable.</p>
<p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/07/china%20traders%205_0.jpg" width="512" height="342" /></p>
<p>As Bloomberg <a href="http://www.bloomberg.com/news/articles/2015-07-31/china-s-stock-futures-drop-as-shanghai-heads-for-steep-july-loss">notes</a>, "while unprecedented state intervention spurred a 18 percent rebound by the Shanghai Composite from its July 8 low, volatility returned on Monday when the gauge plunged 8.5 percent. Outstanding margin debt on mainland bourses has fallen about 40 percent since mid-June, while the number of new stock investors shrank last week to the smallest since the government started releasing figures in May. Individuals account for more than 80 percent of stock trading in China. <strong>“The support measures may have been less effective than what Beijing imagined,” </strong>said Bernard Aw, a strategist at IG Asia Pte. in Singapore.</p>
<p>Worse for China, people's fascination with the equity bubble appears to be fading as demonstrating by tumbling volumes: turnover has fallen as volatility surged. <strong>The value of shares traded on the Shanghai exchange on Thursday was 53 percent below the June 8 peak, </strong>while a 100-day measure of price swings on the Shanghai Composite climbed to its highest level in six years on Friday.</p>
<p>And while the Chinese government continues to crack down on "malicious sellers", the latest target are local Nav Saraos, and anyone using spoofing. Spoofing, which involves placing then canceling orders to move prices, is suspected in 24 accounts on the Shanghai and Shenzhen stock exchanges, the China Securities Regulatory Commission said on its microblog.</p>
<p>Elsewhere, the Hang Seng China Enterprises Index of mainland shares in Hong Kong tumbled 14 percent this month, its worst loss since September 2011. The gauge lost 0.1 percent Friday, while the Hang Seng Index advanced 0.6 percent. The CSI 300 Index was little changed. The Nikkei 225 (+0.3%) pared initial losses following a bout of strong corporate earnings <strong>after the headline Japanese CPI figure grew at its slowest pace in 2-yrs</strong>. Finally, JGB's rose tracking gains in bunds amid month-end buying.</p>
<p>The only notable data from the European morning came in the form of Eurozone CPI (Core Y/Y 1.00% vs. Exp. 0.80%) and unemployment rate (11.10% vs. Exp. 11.00%), with the higher than expected core CPI seeing move higher in EUR , which had outperformed GBP throughout the morning, with some desks attributing the move to month end demand. Elsewhere, CHF has outperformed today after the SNB reported their earnings, which showed a record loss in H1, bringing into question the central bank's ability to continue their intervention policy.</p>
<p>Bunds have underperformed USTs heading into the North American crossover after the better than expected Eurozone CPI data, while USTs remain relatively flat on the day. Also of note, there is a large amount of bond redemptions in Europe presently, with Spain seeing EUR 27.6bIn redeemed yesterday and Italy set for EUR 31.4bIn worth of redemptions on Monday.</p>
<p>The USD trades flat on the day (USD-Index: 0%) with Asia-Pacific hours seeing NZD as the session's laggard, with the latest ANZ business confidence reading showed sentiment among large companies slumped to a 6-year low (-15.3 vs. -2.3) consequently seeing NZD/USD break below the 0.6600 handle.</p>
<p>No firm direction has been found (Euro Stoxx: -0.1%) in European equities today amid the light newsflow, while today's notable earnings reports have included BNP Paribas (+2.8%), Airbus (+3.3%) and Lloyds (-0.5%). Energy names were the worst performers during the European morning, weighed upon by weak energy prices, while todays large cap US earnings include Chevron, Exxon Mobil and Phillips 66 pre market, while separately Berkshire Hathaway are schedule to report aftermarket. </p>
<p>US equity futures are unchanged at this moment.</p>
<p>Commodities continue their recent downtrend today with gold is heading for its largest monthly decline since 2013 after the yellow metal fell lower overnight to continue its recent weakness, while copper remains near six year lows . The energy complex also remains near its lows with WTI on course for its largest monthly fall this year, with sentiment dampened after reports that OPEC Secretary General El¬Badri stated the cartel has no plans to cut oil output.</p>
<p>Key events on the US calendar today: U.S. Chicago purchasing manager, Michigan confidence, ISM Milwaukee, employment cost index due later.</p>
<p><strong>Bulletin Headline Summary from Bloomberg and RanSquawk</strong>:</p>
<ul>
<li>EUR has seen strength this morning along with weakness in Bunds after Eurozone CPI Core printed higher than expected</li>
<li>Commodities continue their downward trend as WTI heads into the NYMEX pit open down around USD 1.00, while gold is down over USD 7.00</li>
<li>Looking ahead, today's data includes Chicago PM! and University of Michigan Sentiment as well as earnings from Chevron, Exxon Mobil and Phillips 66</li>
<li>Treasuries decline, 5/30 spread on track to flatten for a fourth week after auctions and 2Q GDP estimate that bolstered view Fed may begin raising rates in Sept.</li>
<li>China’s stocks fell, capping the benchmark index’s biggest monthly drop since August 2009, as the government struggles to rekindle investor interest amid a $3.5t rout</li>
<li>Greek PM Tsipras staved off an immediate challenge to his premiership, though failure to appease his party’s hard-left fringe brought early elections into view</li>
<li>Euro-area consumer prices rose an annual 0.2%, same pace as in June and in line with median forecast in Bloomberg survey; core inflation unexpectedly accelerated to 1%, fastest in 15 months </li>
<li>Deutsche Bank is seeking to recover internal electronic chat transcripts that were left out of disclosures to regulators during a probe into interest-rate rigging, according to people briefed on the matter</li>
<li>Swiss National Bank had a loss of CHF50.1b in the six months through the end of June, which is a record, according to SNB spokesman Walter Meier</li>
<li>Obama said opponents of the nuclear accord with Iran are “putting the squeeze on Congress” as the administration works to keep supporters in line</li>
<li>Assailants scribbled “revenge” and other Jewish nationalist slogans on two West Bank homes before setting them on fire early Friday, killing a Palestinian infant and critically wounding four family members, Israel’s army said</li>
<li>The State Department is set Friday to post online its next batch of e-mails that Hillary Clinton sent and received on a personal account while she was secretary of state</li>
<li>Sovereign 10Y bond yields mostly higher. Asian stocks mostly higher; European stocks, U.S. equity- index futures lower. Crude oil, copper and gold lower</li>
</ul>
<p><strong>US Event Calendar</strong></p>
<ul>
<li>8:30am: Employment Cost Index, 2Q, est. 0.6% (prior 0.7%)</li>
<li>9:00am: ISM Milwaukee, July, est. 50 (prior 46.55)</li>
<li>9:45am: Chicago Purchasing Manager, July, est. 50.8 (prior 49.4)</li>
<li>10:00am: U. of Mich. Sentiment, July F, est. 94 (prior 93.3)
<ul>
<li>U. of Mich. Current Conditions, July F (prior 106)</li>
<li>U. of Mich. Expectations, July F (prior 85.2)</li>
<li>U. of Mich. 1 Yr Inflation, July F (prior 2.8%)</li>
<li>U. of Mich. 5-10 Yr Inflation, July F (prior 2.7%)</li>
</ul>
</li>
</ul>
<p><strong>DB's Jim Reid completes the market warp as customary:</strong></p>
<p>Another month ticks by with July drawing to a close today. With the Fed potentially in play in September I suspect August will be busier than normal. As we approached month-end, there were a number of factors having an influence on markets yesterday. Macro-wise the main focus was on the US data flow where we saw an above market Core PCE print, slightly below market Q2 GDP reading and a host of various historical revisions including downward revisions to prior year growth. Greece also rumbled away in the background, firstly in an FT article which suggested that the IMF is unwilling to provide a third bailout package to Greece unless more debt relief is provided, and then late last night and post market close when the Syriza Central Committee voted for an emergency September congress. Added to all this was a relatively mixed day for corporate earnings. The end result was a flat day for the S&amp;P 500, paring an early loss as the session wore on, while the Treasury curve saw reasonable flattening, reflecting perhaps the view of a slower trend rate of growth after the various historical revisions (which we’ll touch on shortly). 2y Treasuries weakened with yields moving 2.4bps higher to 0.729%, while 10y (-2.7bps) and 30y (-5.5bps) yields fell to 2.260% and 2.943% respectively. The Greenback caught a reasonable bid on the back of the PCE print with the Dollar index closing +0.60% and higher for its third consecutive daily gain. Gold (-0.74%) continued to march lower however and is on track for its worst month since June 2013 while oil markets were relatively well behaved with Brent finishing down 0.13%.</p>
<p>Digging into the data first of all. The advance estimate for Q2 GDP came in at 2.3% saar which was slightly below market expectations of 2.5%, although driven by a strong contribution from personal consumption (2.9% saar vs. 2.7% expected). At the same time, Q1 GDP was revised up to 0.6% from -0.2% previously. There was much focus on the historical annual revisions also. 2014 real GDP growth was revised up 0.1% to 2.5% however the 2012 and 2013 readings were revised down 0.3% and 0.6% to 1.3% and 2.6% respectively. On the inflation front, the Q2 Core PCE report came in above consensus at 1.8% saar qoq (vs. 1.6% expected) while the Q1 reading was revised up to 1.0% from 0.8%.</p>
<p>Taking into account the historical revisions to growth now in the US, DB’s Joe Lavorgna notes that the implied annualized growth in productivity from 2012 to present is now 0.3% compared to 0.5% previously. Joe estimates potential GDP growth at just 1%. He notes that if the US sustains GDP gains in the low 2s, the unemployment rate will continue to fall. However weaker productivity readings will further the argument for the doves that the neutral fed funds rate is lower and so the Fed will not need to tighten very much. This will ultimately depend on inflation pressure however, especially in the context of a lower potential growth rate than what was previously assumed meaning there could be a smaller output gap. So an interesting set of revisions with notable implications for trend growth. We still struggle to see how the Fed can be too aggressive in this cycle and expect a very low terminal funds rate.</p>
<p>Having said that, Fed Funds contracts did shift up in the aftermath (Dec15 +2bps and Dec16 +4bps) of the data yesterday along with an increase in the implied probability of a September move to 48%. Before we move on, labour market data yesterday came in the form of initial jobless claims which rose 8k last week to 267k (vs. 270k expected).</p>
<p>Over in Europe equity markets managed to recover from a sudden shift lower after an FT article on Greece and the IMF created some noise. The Stoxx 600 eventually recovered to finish +0.57% while the DAX (+0.40%) and CAC (+0.58%) both finished up. The same couldn’t be said in credit markets however where indices failed to recover from a move wider with Crossover and Main closing +2bps and +1bp wider respectively. The FT story suggested that the IMF’s board has been told that Athens high debt levels and poor record of implementing reforms will disqualify Greece from a third bailout from the IMF. The article then went onto say that the Fund will only decide to take part in the bailout agreement after European nations have ‘agreed on debt relief’ suggesting that the headline was somewhat overplayed. DB's George Saravelos thinks the article was slightly overplayed and that negotiations continue. Elsewhere on Greece, post the closing bell and after another long session in parliament we heard that the Syriza Central Committee backed PM Tsipras’ call for an emergency Congress in September and in turn potentially lifting the near term political pressure which would have arisen in the event of an ordinary congress being called.</p>
<p>Looking at the follow up in Asia this morning, bourses are generally mixed with losses being led out of China as we reach the midday break with the Shanghai Comp (-0.98%) and Shenzhen (-0.42%) both down – the latter on course for a double digit decline this week – while the Kospi (-0.10%) is also lower. Reuters meanwhile is reporting that the China Securities Regulator has suspended 24 stock trading accounts for suspected trading irregularities. Elsewhere, the Hang Seng (+0.40%) and ASX (+0.49%) are both firmer on the other hand while the Nikkei (+0.08%) is more or less unchanged. We’ve also had inflation data out of Japan this morning where the headline CPI rate ticked down one-tenth of a percent to 0.4% yoy (vs. 0.3% expected) which was the lowest monthly reading since June 2013 while the core (+0.1% yoy vs. 0.0% expected) remained unchanged and the core-core ticked up two-tenths to +0.6% yoy (vs. +0.4% expected). The jobless rate for Japan meanwhile ticked up to 3.4% from 3.3% previously. Elsewhere, S&amp;P 500 futures are unchanged while 10y Treasuries are -0.5bps lower.</p>
<p>As mentioned it was a relatively mixed day on the earnings front yesterday. Facebook and Whole Foods were notable decliners having reported after the closing bell on Wednesday while Proctor &amp; Gamble and ConocoPhillips also saw their share prices slump following the latest respective quarterly reports – the latter in particular lowering full year capex guidance and highlighting the potential for exceeding cost cutting guidance as more evidence of stress ahead for the energy space. Western Digital and Mondelez helped to offset some of the weakness however while Expedia and Amgen rose 8% and 2% respectively in post market trading with their earnings reports. At the latest count with 341 of the S&amp;P 500 companies having reported, earnings beats have ticked down to 74% (from 76% on Wednesday) while sales beats are back down to 50%.</p>
<p>Looking at the remainder of the data flow in Europe yesterday, over in Germany we saw the July CPI reading print in line at +0.2% mom, although the annualized rate did tick down slightly below expectations to +0.2% yoy (from +0.3%). Over in Spain we saw the Q2 GDP reading print in line for the quarter at +1.0% qoq however there was some weakness in the CPI report where we saw a -1.0% mom fall for July, dragging the annualized rate down to 0.0% yoy (vs. +0.1% expected). Confidence indicators for the Euro area were generally encouraging however. Economic (104.0 vs. 103.2 expected), business climate (0.39 vs. 0.19 expected), industrial (-2.9 vs. -3.4 expected) and services (8.9 vs. 8.0 expected) prints all saw jumps for the month of July, taking them above expectations with the Economic sentiment reading in particular reaching a four-year high. Sovereign bond yields ticked down over the course of yesterday’s session, led by 10y Bund yields which fell 6.7bps to 0.648% and just shy of the MTD lows.</p>
<p>Onto the day ahead now and what’s set to be another busy one for data. We start this morning in Germany where we get the June retail sales print before we then get PPI and consumer spending data in France. The first estimate of the July inflation report for the Euro area follows this (with current expectations for no change in the headline and core at 0.2% yoy and 0.8% yoy respectively). Unemployment data for the Euro area and Italy, as well as CPI in the latter round off the data this morning. In the US this afternoon there will be much focus on the Q2 employment cost index while the Chicago PMI for July will also be closely watched. The University of Michigan consumer sentiment print and ISM Milwaukee are the other releases. Corporate earnings will continue to remain a focus with Berkshire Hathaway, Chevron and Exxon Mobil the notable highlights.</p>
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http://www.zerohedge.com/news/2015-07-31/chinese-stocks-drop-end-worst-month-august-2009-us-equity-futures-flat#comments8.5%Berkshire HathawayBondChicago PMIChinaConsumer PricesConsumer SentimentCopperCore CPICPICrudeCrude OilDeutsche BankEquity MarketsEurozoneExxonFranceGermanyGreeceHong KongInitial Jobless ClaimsIranItalyJapanJim ReidLloydsMichiganNikkeiNYMEXOPECOutput GapPersonal ConsumptionRANSquawkReutersShenzhenUnemploymentUniversity Of MichiganVolatilityFri, 31 Jul 2015 10:52:59 +0000Tyler Durden510745 at http://www.zerohedge.com"Say A Little Prayer" Bill Gross Warns, "Zombie Corporations Now Roam The Real Economy"http://www.zerohedge.com/news/2015-07-30/say-little-prayer-bill-gross-warns-low-rates-arent-cure-theyre-problem
<p>Having <a href="http://www.zerohedge.com/news/2015-07-29/bill-gross-explains-90-seconds-how-its-all-big-shell-game"><strong>exposed the reality that the world&#39;s capital markets are a manipulated shell game</strong></a>, <a href="https://www.janus.com/bill-gross-investment-outlook">Janus&#39; Bill Gross has a message for the perpetual bulls in his latest letter to investors</a> - &quot;say a little prayer.&quot; Gross continues, <strong><em>&quot;low interest rates are not the cure &ndash; they are part of the problem,&quot;</em></strong> warning that ZIRP has enabled, <em>&quot;a host of <strong>zombie and future zombie corporations now roam the real economy. Schumpeter&rsquo;s &#39;creative destruction&#39; &ndash; the supposed heart of capitalistic progress &ndash; has been neutered</strong>. The old remains in place, and new investment is stifled.&quot;</em> As he previously warned, when the central bank manipulation is removed the likely trajectory of prices is downward...</p>
<p>&nbsp;</p>
<p><a href="https://www.janus.com/bill-gross-investment-outlook"><u><strong>Janus Capital&#39;s Bill Gross Investment Outlook</strong></u></a></p>
<p>I&#39;m not what you would call a &ldquo;prayerful&rdquo; type of guy. Even at 30,000 feet, when the air gets rough, I never invoke the &ldquo;God&rdquo; word, settling instead for promising myself that if I ever get back to terra firma, I will never fly again, which I promptly forget days or even hours later. It&rsquo;s not that I&rsquo;m a non-believer in prayer&rsquo;s ultimate destination, but more of a cynical take on why the Lord would hand out party favors to everyone that asked, or to those that asked most intently.</p>
<p>I do remember praying nightly as a child though, which might indicate that my mom and dad were better parents than I have given them credit for. I recited the Lord&rsquo;s Prayer, then followed it up with the standard &ldquo;God Blesses&rdquo; &ndash; in my case &ldquo;God Bless Mommie, Daddie, Chip, Lyn, Mamie, Budgie, Brenda, Stinky and everyone in the whole world.&rdquo; Stinky was my brother&rsquo;s cat, so named because she used the house as her personal litter box in the days before my parents could buy one at the local &ldquo;five and dime&rdquo;. Brenda was the neighbor&rsquo;s bulldog but warranted a mention ahead of our own Stinky because &ndash; well &ndash; she didn&rsquo;t smell. Funny how we prioritize our prayerful moments.</p>
<p>Funny, too I think, about how I learned two different versions of the Lord&rsquo;s Prayer: one &ndash; the Protestant litany &ndash; spoke to &ldquo;forgiving our debts as we forgive our debtors&rdquo;; the other &ndash; maybe a more traditional Catholic influenced version &ndash; substituted &ldquo;forgive our trespasses as we forgive those who trespass against us.&rdquo; The differences never much bothered me as I prayed less and sinned more into my teenage years, but later I got to thinking about it as I entered the bond market and began to contemplate the odds of paying and being paid, or trespassing and being trespassed against with other people&rsquo;s money. Given a chance, I thought I would infinitely prefer forgiving a trespasser as opposed to a debtor.</p>
<p>Debtors didn&rsquo;t necessarily belong in a prison but then they didn&rsquo;t belong in a prayer either, where forgiveness was akin to abrogation, default, and not getting your good old fashion money back! Over the following years then, my own kids got stuck with &ldquo;trespasses&rdquo; instead of &ldquo;debts&rdquo; even though I eventually realized &ndash; as do you, my more prayerful readers &ndash; that they are meant to convey one and the same thing. Still as I wound my way through my bond career, and the inevitable Penn Centrals, Continental Banks, and Lehman Brothers of this business, I had frequent moments of silence, if not teensy prayers, that gave thanks to the Lord for getting most of my (your) money back. Like bumpy air at 30,000 feet though, the next day I was flying again in the bond market but with a slightly firmer grip on the wheel. Life just seems to go that way.</p>
<p><img alt="Quote Image August 2015 Bill Gross " height="156" src="https://17eb94422c7de298ec1b-8601c126654e9663374c173ae837a562.ssl.cf1.rackcdn.com/Images//umbrella%20redesign/2015%20Outlook/PullQuote1.jpg" width="626" /></p>
<p>Speaking of bumpy air, trespassing, and the forgiveness of debt, the Greek/German tragedy of midsummer seems to have landed on terra firma for at least a few months, although inevitably the weakness of the Eurozone with its common currency, but disparate fiscal philosophies spells renewed turbulence in financial asset markets. The Eurozone &ndash; and the Eurounion itself as Britain&rsquo;s 2017 referendum may eventually reveal &ndash; is a dysfunctional family and may always be. Examples: 1) Germany vs. France; 2) the Balkans; 3) Southern peripherals; and 4) the more stoic Nordic countries. They are all so different that a common purpose seems to be missing. Perhaps that purpose if summed in three words might be &ldquo;Peace and Prosperity&rdquo; but while the peace seems to be assured by German passivity and the military blanket of NATO, prosperity is a subject of conflicting views as to which policies lead to long term growth. Draghi&rsquo;s ECB and the Merkel controlled EZ ascribe to the old theory of &ldquo;Feed a fever, starve a cold&rdquo; &ndash; the &ldquo;fever&rdquo; in this case being financial bull markets fed with 0% credit, and the &ldquo;cold&rdquo; being fiscal austerity starved by balanced budgets. So far, the philosophy seems to be working well for Germany, miserably for Greece, and not so well for all other EZ countries in between.</p>
<p><strong>But these conflicting views as to how to treat a fever or cure a cold are global in scope. </strong>Japan appears to be feeding both monetary and fiscal maladies with its persistent QE and substantial budget deficits, yet has little to show for it in terms of either inflation or real growth. China seems to resemble a desperate patient, changing doctors and proposed remedies every other month or so. First, it feeds the Shenzhen market fever, allowing it to &ldquo;double bubble&rdquo; in the first 6 months of 2015, then authorities starve it by &ldquo;inactivating&rdquo; two thirds of market listed shares, and then eventually create financial SOEs (state owned enterprises) to buy billions of stocks to bail out naïve first time investors and ultimately its own economy.</p>
<p>But, because it is the finance system&rsquo;s global locomotive, it is the United States where this debate seems to be most critical, and where it subtly seems to be changing. It is not the fiscal stance that appears to be morphing, however. Republican &ldquo;tax cut&rdquo; orthodoxy will likely dominate for at least another few years. It&rsquo;s <span style="text-decoration: underline;">monetary policy where the battleground for evolutionary ideas is taking place, as the Fed begins to recognize that zero percent interest rates increasingly have negative, as well as positive consequences.</span> Historically, the Fed and almost all other central banks have comfortably relied on a model which assumes that lower and lower yields will stimulate not only asset prices but investment spending in the real economy. With financial assets, the logic is straightforward: higher bond prices and stock P/E&rsquo;s almost axiomatically elevate markets, although the assumed trickle-down effect leading to higher real wages has not followed suit. In the real economy, it seemed almost straightforward as well: if a central bank could lower the cost of debt and equity closer and closer to zero, then inevitably the private sector would take the bait &ndash; investing in cheap plant + equipment, technology, innovation &ndash; you name it. &ldquo;Money for nothing &ndash; get your clicks for free&rdquo;, I suppose. But no. Not so.</p>
<p><img alt="Bill Gross quote August - IO" height="156" src="https://17eb94422c7de298ec1b-8601c126654e9663374c173ae837a562.ssl.cf1.rackcdn.com/Images//umbrella%20redesign/2015%20Outlook/PullQuote2-01.jpg" width="626" /></p>
<p>Corporate investment has been anemic. Structural reasons abound and I have tried to convey that ever since my well-advertised New Normal, in 2009, which introduced the probability of a future generation of low real growth due to aging demographics, tighter regulations, and advancing technology permanently displacing workers. But there are other negatives which seem to be directly the result of zero bound interest rates. 3 month Libor rates have rested near 30 basis points for 6 years now and high yield spreads have narrowed and narrowed again in the quest for higher investment returns. Because BB, B, and in some cases CCC rated companies have been able to borrow at less than 5%, <strong>a host of zombie and future zombie corporations now roam the real economy. Schumpeter&rsquo;s &ldquo;creative destruction&rdquo; &ndash; the supposed heart of capitalistic progress &ndash; has been neutered. The old remains in place, and new investment is stifled. And too, because of low interest rates, high quality investment grade corporations have borrowed hundreds of billions of dollars, but instead of deploying the funds into the real economy, they have used the proceeds for stock buybacks. </strong>Corporate authorizations to buy back their own stock are running at an annual rate of $1.02 trillion so far in 2015, 18% above 2007&rsquo;s record total of $863 billion.</p>
<p><span style="text-decoration: underline;">But perhaps the recent annual report from the BIS &ndash; the Bureau for International Settlements &ndash; says it best. The BIS is after all the central banks&rsquo; central banker, and if there be a shift in the &ldquo;feed a fever&rdquo; zero interest rate policy of the Fed and other central banks, perhaps it would be logically introduced here first. The BIS emphatically avers that there are substantial medium term costs of &ldquo;persistent ultra-low interest rates&rdquo;. Such rates they claim, &ldquo;sap banks&rsquo; interest margins&hellip;cause pervasive mispricing in financial markets&hellip;threaten the solvency of insurance companies and pension funds&hellip;and as a result test technical, economic, legal and even political boundaries.&rdquo;</span> Greece is not specifically mentioned, nor the roller coaster ride of Chinese equity markets, nor the rising illiquidity of global high yield bond markets, nor the&hellip;well a reader should get the point. Low interest rates may not cure a fever &ndash; they may in fact raise a patient&rsquo;s temperature to life threatening status. Yellen, Fisher, Dudley and company may not be in total agreement, but they assuredly are listening as this week&rsquo;s Fed meeting will likely attest.</p>
<p>There is no statistical reason per se for the Fed to raise interest rates, yet absent a major global catastrophe we are likely to get one in September. But the reason will not be the risk of rising inflation, nor the continued downward push of unemployment to 5%. The reason will be that the central bankers that are charged with leading the global financial markets &ndash; the Fed and the BOE for now &ndash; are wising up; that the Taylor rule and any other standard signal of monetary policy must now be discarded into the trash bin of history. <span style="text-decoration: underline;">Low interest rates are not the cure &ndash; they are part of the problem. Say a little prayer that the BIS, yours truly, and a growing cast of contrarians, such as Jim Bianco and CNBC&rsquo;s Rick Santelli, can convince the establishment that their world has change</span></p>
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http://www.zerohedge.com/news/2015-07-30/say-little-prayer-bill-gross-warns-low-rates-arent-cure-theyre-problem#commentsB+Bill GrossBISBOEBondCapital MarketsCentral BanksChinadefaultDemographicsEquity MarketsEurozoneFisherFranceGermanyGreeceHigh YieldInsurance CompaniesInvestment GradeJanus CapitalJapanJim BiancoLehmanLehman BrothersLIBORMonetary PolicyNew NormalRealityRick SantelliShenzhenUnemploymentThu, 30 Jul 2015 14:24:35 +0000Tyler Durden510704 at http://www.zerohedge.comLagarde Says No To IMF Aid For Greecehttp://www.zerohedge.com/news/2015-07-30/lagarde-says-no-imf-aid-greece
<p>Over the course of six painful months of negotitations between Athens and its creditors, one concern lurking in the background was whether the IMF would be on board with a third program for Greece.&nbsp;</p>
<p>Questions over the IMF's role in the new €86 billion aid package came to a head this month when two consecutive "leaks" showed that according to an internal analysis of Greece's debt sustainability, the Fund would not be able to participate in the new bailout unless EU creditors were willing to write down their portion of Greece's debt.&nbsp;</p>
<p>This touched off a politically charged and explosive debate which pitted the IMF (and, by implication, the US) against Brussels (and, by implication, Berlin) on how to go about providing debt relief for the Greeks - the IMF pushed for haircuts, while Brussels favored "re-profiling."</p>
<p>Now, we get the first sign that the IMF may be ready to officially pull out. Here's FT, <a href="http://www.ft.com/intl/cms/s/0/4c7b7f2c-36b5-11e5-bdbb-35e55cbae175.html">with the breaking story</a>:</p>
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<p><strong>The International Monetary Fund’s board has been told Athens’ high debt levels and poor record of implementing reforms disqualify Greece from a third IMF bailout of the country, raising new questions over whether the institution will join the EU’s latest financial rescue.</strong></p>
<p>&nbsp;</p>
<p>The determination, presented by IMF staff at a two-hour board meeting Wednesday, means that while IMF staff will participate in bailout negotiations currently under way in Athens, the Fund will not decide whether to agree a new programme for months – potentially into next year.</p>
<p>&nbsp;</p>
<p>That delay could have significant repercussions – particularly n Germany, where officials have long said it would be impossible to win Bundestag approval for the new €86bn bailout without the IMF on board.</p>
<p>&nbsp;</p>
<p>According to a four-page “strictly confidential” summary of Wednesday’s board meeting obtained by the Financial Times, IMF negotiators will “participate in policy discussions” to ensure the eurozone’s new bailout “is consistent with what the Fund has in mind”.&nbsp;</p>
<p>&nbsp;</p>
<p><strong>But they “cannot reach staff level agreement at this stage.”</strong></p>
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<p>EURUSD is not reacting well...</p>
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<p>&nbsp;</p>
<p>FT goes on to note that "the IMF decided last week that its existing bailout programme ... needed to be scrapped because it could no longer achieve its stated goal of helping Greece recover to the point where it could return to private debt markets." That, in turn, "forced Athens to request a new IMF programme, which requires board approval, necessitating Wednesday’s meeting."</p>
<p>All of this comes at a decisively inopportune time. As discussed extensively earlier, PM Alexis Tsipras has now called for a Syriza referendum on the bailout, a move which marks the culmination of weeks worth of political infighting. The fractious relationship between the PM and Syriza hardliners might well unsettle creditors and the IMF's refusal to commit until the debt relief issue is solved only adds to the confusion.&nbsp;</p>
<p>Back to <a href="http://www.ft.com/intl/cms/s/0/4c7b7f2c-36b5-11e5-bdbb-35e55cbae175.html">FT</a>:</p>
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<p><em>According to the summary, IMF staff concluded Greece no longer clears two of the four requirements in the IMF’s "exceptional access criteria" – the Fund framework that allows it to grant bailouts of larger-than-normal size.</em></p>
<p>&nbsp;</p>
<p><strong><em>Under the criteria, a bailout recipient must be able to prove it has the “institutional and political&nbsp;</em></strong><strong><em>capacity” to implement economic reforms, and that “there is a high probability that the member’s public debt is sustainable in the medium term”.</em></strong></p>
</blockquote>
<div>Between Syriza's internal problems and Europe's indecisive stance on debt relief, it's clear that neither of these conditions have been met, which throws the IMF's participation into question because after all - and here's the punchline - Lagarde has to "be mindful about the reputation of the Fund."</div>
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http://www.zerohedge.com/news/2015-07-30/lagarde-says-no-imf-aid-greece#commentsCreditorsGermanyGreeceThu, 30 Jul 2015 13:43:57 +0000Tyler Durden510702 at http://www.zerohedge.comChinese Stocks Tumble In Close Of Trading "Causing Panic", US GDP To Be Revised Higher On Seasonal Adjustmentshttp://www.zerohedge.com/news/2015-07-30/chinese-stocks-tumble-close-trading-causing-panic-us-gdp-be-revised-higher-seasonal-
<p>We start off the overnight wrap up with the usual place, China, where in a mirror image of Wednesday's action, stocks once again started off uneventful, then gradually rose in the afternoon session and meandered near unchanged territory until the last half hour, when out of the blue they tumbled to close near the day's low, some 2.2% below yesterday's closing level.</p>
<blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">BREAKING: Shanghai benchmark index mysteriously sinking in last 5 mins of trading, down 2.2% and causing panic again <a href="http://t.co/YAcDVSGXrW">pic.twitter.com/YAcDVSGXrW</a></p>
<p>— George Chen (@george_chen) <a href="https://twitter.com/george_chen/status/626650410174935041">July 30, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><p>Bloomberg <a href="http://www.bloomberg.com/news/articles/2015-07-30/china-s-stocks-drop-as-margin-debt-slides-to-four-month-low">adds </a>that drugmakers and technology companies led declines. <strong>A gauge of 100-day price-swings rose to the highest level in six years. </strong>Trading volumes in Shanghai have halved from their peaks in June, while margin debt, which had fueled a world-beating rally for China’s stocks, declined to a four-month low. </p>
<p>All 10 industries in the CSI 300 slid more than 2 percent, led by a 4.1 percent slump in the gauge of health-care companies. Lepu Medical Technology Co. plunged 8.3 percent, while Hualan Biological Engineering Inc. slid 5.2 percent. The drug sub-index has been the best performer over the past three month, falling 5.6 percent versus the 20 percent slump for the CSI 300.</p>
<p>Volatility has increased this week as Monday’s 8.5 percent plunge by the benchmark gauge shredded a calm induced by unprecedented state intervention.</p>
<p>“There were no major macro developments,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “<strong>The disconnect with fundamentals continues making trading challenging</strong>.”</p>
<p>What caused it? It is unclear why the government would step away from the bid despite the PBOC injecting liquidity for the 11th consecutive day, just as everyone was selling in an attempt to capture the EOD upside as telegraphed the day before, or perhaps the selling was just too violent. </p>
<p>One possible catalyst came from <a href="http://www.reuters.com/article/2015/07/30/markets-hongkong-china-stocks-open-idUSL3N10A1E320150730">Reuters which reported </a>that that <strong>Chinese banks were investigating their exposure to the stock market via wealth management products and loans backed by stock as collateral. </strong>If true, since this was the catalyst that also ended the steep ascent of mega fraud Hanergy, one can see why Chinese gamblers would be concerned and rush to take profits. </p>
<p>And with every close on a down tick forcing the PBOC and the polibturo to implement even more "anti-panic" regulations which merely reinforce the lack of faith in a normal market, expect the situation to get worse before it gets bettter.</p>
<p>With China out of the way, it brings us to the main event of the day: the first estimate of US Q2 GDP release which also will incorporate the annual revision to GDP growth with the widely mocked and goalseeked "<a href="http://www.zerohedge.com/news/2015-05-22/us-department-commerce-officially-jumps-shark-will-double-seasonally-adjust-gdp-data">second seasonal adjustments</a>" part of historical GDP, whose only purpose will be to remove the negative Q1 GDP print from 2014 and 2015.</p>
<p>This is how BofA sees today's GDP release:</p>
<ul>
<li>The first estimate of 2Q GDP is likely to show growth of 3.0%, which would be a bounce from the contraction of 0.2% in 1Q. However, it is important to remember that the history will be revised along with this report. The annual GDP revisions will alter the trajectory of growth, particularly over the past three years. <strong>There will be a change to the seasonal adjustment process which should push up growth in 1Q, </strong>reflecting stronger seasonal factors, but potentially lower the later quarters. This adds additional uncertainty around forecasting 2Q GDP growth</li>
<li>The annual revision to GDP growth on July 30th will adjust estimates of growth over the past few years. If growth is indeed revised higher it would help solve the puzzle of low productivity growth.</li>
<li>This will also be the first release of the new GDP and GDI composite. This will show a stronger trend of growth given that GDI has outpaced GDP recently.</li>
<li>Taking a step back and examining a range of indicators reveals an economy expanding at a mid-2% pace, largely consistent with the Fed’s forecasts.</li>
<li><strong>Although it is hard to say with any certainty, we believe GDP growth is likely to be revised up modestly. </strong>This will likely leave the Fed comfortable arguing that the economy is making progress closing the output gap, allowing a gradual hiking cycle to commence.</li>
</ul>
<p>Actually it is rather easy to say with certainty that this is precisely what will happen, which however may be a clear case of good news is bad news (for stocks), since a substantial upward revision to GDP data will greenlight Yellen to hike rates that much sooner. As a reminder the current <a href="https://www.frbatlanta.org/cqer/research/gdpnow.aspx">Atlanta Fed estimate </a>has Q2 GDP at 2.4%. Will it be the closest forecast again? Find out in just over 90 minutes.</p>
<p>Back to markets where aside from China, Asian equities traded mostly higher following a strong lead from Wall Street, as the Fed failed to yield any definitive clues as to when a Fed rate-lift off would occur. Nikkei 225 (+1.1%) outperformed amid a slew of strong corporate earnings, coupled with Industrial production growing at its fastest rate in a year (2.0% vs. Exp. 1.3%); yet another tumble in the JPY certainly helped push stocks higher. ASX 200 (+0.8%) was led higher by miners after iron ore prices rose 4.6%. Finally, JGB's fell in conjunction with USTs as the demand for safer assets subsided following the broad based gains in Asian indices.<br />&nbsp;<br />Today has seen the busiest day of earning season so far in Europe and as such company specific news has dictated market movements . A host of large cap names all reported, including heavyweights Siemens (+3.0%), Shell (+2.8%), Deutsche Bank (+2.6%), AstraZeneca (+2.1%), Sanofi (-0.4%) and Santander (-1.9%), with the IBEX underperforming (-0.6%, Euro Stoxx: -0.1%) after being weighed on by Santander, with all other indices trading in the green.</p>
<p>Yesterday saw Facebook Inc (FB) report after the close, with Q2 Adj. EPS USD 0.50 vs. Exp. USD 0.47, CFO says they are affected by currency headwinds. Q2 revenue USD 4.04bIn vs. Exp. USD 3.99b1n. Q2 MAU's 1.49bIn vs. Exp. 1.475bIn Q2 DAU's average of 968m1n vs. Exp. 970.5mln. High profile US earnings include US earnings including P&amp;G, Time Warner Cable and Teva pre-market, while Amgen and Linkedln report after the close.</p>
<p>The USD-index has spent the European morning in positive territory, however coming off its highest levels heading into the North American crossover, with participants initially reacting to the FOMC meeting yesterday, whereby no clear clues were given as to when a Fed rate hike but with the FOMC highlighting that job gains had been 'solid' ., while elsewhere we have seen a spate of German data, with German regional CPIs painting a mixed picture and unemployment change (9K vs. Exp. -5K) coming in marginally higher than expected, with the 9000 unemployed breaking a 9 month run of improvements in employment.</p>
<p>In line with the mixed regional German CPIs, we have seen choppy price action in Bunds, with the German benchmark outperforming its US and UK counterparts following the mixed data with T-Notes lower on the back of the aforementioned Fed statement last night.</p>
<p>USD strength has weighed upon gold, with the yellow metal falling USD 11.00 to break below USD 1185 in early European trade with some attributing the move to a large fund sale after liquidating a position on the back of last night's Fed announcement. WTI and Brent both trade in modest positive territory this morning after seeing strength yesterday on the back of DoE's, with the latest move higher being attributed to reports from WSJ that Saudi Arabia are to lower production from record level.</p>
<p><em><strong>In summary: </strong></em>European shares remain higher, close to intraday highs, with the oil &amp; gas and tech sectors outperforming and autos, telcos underperforming. Companies including Siemens, Deutsche Bank, Shell, AstraZeneca, Diageo, RBS, BT, ABI, Swiss Re, Sanofi, Infineon, Renault, EDF, Telefonica release&nbsp; earnings/statements. Spanish 2Q GDP in line with quarterly growth est., Swedish GDP above. Japanese industrial output above estimates. The Dutch and French markets are the best-performing larger bourses, Spanish the worst. The euro is little changed against the dollar. Italian 10yr bond yields fall; French yields decline. Commodities gain, with nickel, zinc underperforming and Brent crude outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, GDP, personal consumption, core PCE due later.</p>
<p><strong>Market Wrap</strong></p>
<ul>
<li>S&amp;P 500 futures up 0.1% to 2103.2</li>
<li>Stoxx 600 up 0.6% to 396.3</li>
<li>US 10Yr yield up 2bps to 2.31%</li>
<li>German 10Yr yield down 2bps to 0.7%</li>
<li>MSCI Asia Pacific unchanged at 140.8</li>
<li>Gold spot down 0.9% to $1086.7/oz</li>
<li>Eurostoxx 50 +0.5%, FTSE 100 +0.7%, CAC 40 +0.8%, DAX +0.7%, IBEX -0.2%, FTSEMIB +0.6%, SMI +0.6%</li>
<li>Asian stocks little changed with the Nikkei outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific up 0% to 140.8</li>
<li>Nikkei 225 up 1.1%, Hang Seng down 0.5%, Kospi down 0.9%, Shanghai Composite down 2.2%, ASX up 0.8%, Sensex up 0.5%</li>
<li>7 out of 10 sectors rise with materials, energy outperforming and tech, health care underperforming</li>
<li>Euro down 0.09% to $1.0974</li>
<li>Dollar Index up 0.28% to 97.25</li>
<li>Italian 10Yr yield down 7bps to 1.84%</li>
<li>Spanish 10Yr yield down 5bps to 1.9%</li>
<li>French 10Yr yield down 3bps to 0.98%</li>
<li>S&amp;P GSCI Index up 0.6% to 387.2</li>
<li>Brent Futures up 1.5% to $54.2/bbl, WTI Futures up 0.8% to $49.2/bbl</li>
<li>LME 3m Copper down 0.8% to $5284/MT</li>
<li>LME 3m Nickel down 1.6% to $11075/MT</li>
<li>Wheat futures up 0.8% to 500.3 USd/bu</li>
</ul>
<p><strong>Bulletin headline summary from RanSquawk and Bloomberg:</strong></p>
<ul>
<li>The USD-index has spent the European morning in positive territory as participants react to the FOMC meeting yesterday</li>
<li>Today has seen the busiest day of earning season so far in Europe and as such company specific news has dictated market movements</li>
<li>Today's US data includes GDP Advanced reading, Core PCE and weekly jobs numbers </li>
<li>Treasuries fall for a third day before<br />week’s supply concludes with $29b 7Y notes; WI yield 2.055% vs<br />2.153% in June.</li>
<li>Chinese stocks fell suddenly in the last hour of trading, almost wiping out Wednesday’s rally and leaving investors in the dark about reasons for the moves</li>
<li>Trading was almost a reverse image of the previous day, when the Shanghai Composite surged in the last hour to close 3.4% higher</li>
<li>Greece’s Prime Minister Tsipras confronted rebels within his own party for not backing him, in a showdown that could put Europe’s most indebted state on course for snap elections</li>
<li>Members of German Chancellor Angela Merkel’s coalition are seeking to amend euro-region rules to ensure private investors bear the brunt of an insolvency by a member state of the currency union</li>
<li>Euro-area economic confidence hit a four-year high this month; outlook may be bolstered by bailout deal that averted Greece’s exit from euro</li>
<li>Saudi Arabia’s recent overtures to other partners suggest the U.S./Saudi relationship is going through another reappraisal because of the landmark accord with regional rival Iran</li>
<li>Sovereign 10Y bond yields mixed. Asian stocks mixed; European stocks gain U.S. equity- index futures lower. Crude oil higher, copper and gold lower</li>
</ul>
<p><strong>US Event Calendar</strong></p>
<ul>
<li><strong>8:30am: GDP Annualized q/q, 2Q A, est. 2.5% (prior -0.2%)</strong>
<ul>
<li>Personal Consumption, 2Q A, est. 2.7% (prior 2.1%)</li>
<li>GDP Price Index, 2Q A, est. 1.5% (prior 0%)</li>
<li> Core PCE q/q, 2Q A, est. 1.6% (prior 0.8%)</li>
</ul>
</li>
<li>8:30am: New Advance Report on U.S. International Trade in Goods</li>
<li>8:30am: Initial Jobless Claims, July 25, est. 270k (prior 255k)</li>
<li>Continuing Claims, July 18, est. 2.205 (prior 2.207m)</li>
<li>9:45am: Bloomberg Consumer Comfort, July 26 (prior 42.4)</li>
<li>1:00pm: U.S. to sell $29b 7Y notes</li>
</ul>
<p><strong>DB's Jim Reid completes the overnight wrap</strong></p>
<p>If you believed the Fed would raise rates in September before yesterday's FOMC statement then you probably won't have changed your mind. They kept their options open but did add a sentence suggesting that job gains have been "solid" which hinted at their confidence in the economy. However if you're one of the doves then you'll be pleased they removed the phrase “energy prices appear to have stabilized. However if they hadn't it would have been strange given recent moves. The most interesting change from the last statement was the tweak to its forward guidance as it added the word “some” to this sentence - “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen SOME further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.” Does this mean the bar has been lowered for what they need to see to pull the trigger. It’s still pretty vague and no doubt thousands of analysts around the globe will be spending hours debating the addition of a single word. For us there are still great risks in starting a hiking cycle with the great fragility in the global economy and financial system, however the Fed don't seem to share such a view and it's going to be a close call for September. Much probably depends on the two interim payroll reports and whether commodities stabilise.</p>
<p>There was fairly minimal reaction in the Fed Funds market in the aftermath of the statement, although we’ve seen more material moves overnight. Yesterday the Dec15 contract closed unchanged at 0.310% (where it’s been all week) while the Dec16 contract rose 1bp to 1.010%. This morning however we’ve seen the respective contracts move +1.5bps and +4.0bps higher. With that, Bloomberg is now reporting that the probability of a hike by September based on the futures market is priced at 42% (up from 38% on Tuesday) while the probability of a move by December is currently priced at 74% (up 4% from Tuesday).</p>
<p>The main mover yesterday was the Greenback with the broader Dollar index, although plunging 0.3% in the initial moments following the release, bouncing back half a percent to close +0.21% as the market slowly digested some of the minor tweaks in the language. In truth this was the only notable price mover following the statement. 10y Treasury yields closed 3.6bps higher at 2.286% which was where they were leading into the statement. Risk assets had a firmer day all round although again the bulk of the gains had been realized preFOMC with fairly minimal reaction post the statement. A boost from energy and industrials stocks in particular helped the S&amp;P 500 close +0.73% while the Dow (+0.69%) and NASDAQ (+0.44%) also closed up. In credit CDX IG finished three-quarters of a basis point tighter while the CDX HY spread tightened 9bps. In the commodity space meanwhile Gold closed +0.13% at $1097/oz while WTI (+1.69%) and Brent (+0.15%) rebounded off the day’s lows following the latest US inventory data which showed a surprise fall in crude stockpiles.</p>
<p>As well as the move in Fed Funds contracts this morning, 10y Treasury yields have moved 2.7bps higher in the Asia session this morning while the Dollar index is +0.3%. As we hit the midday break in China meanwhile, the Shanghai Comp (-0.04%), Shenzhen (-0.12%) and CSI 300 (-0.19%) are all a touch lower in another choppy session where bourses have swung between gains and losses (albeit in a small range). Elsewhere bourses are generally mixed. The Nikkei (+1.06%) is leading gains on the back of a stronger than expected industrial production reading (+0.8% mom vs. +0.3% expected) while the ASX (+0.68%) is also firmer. The Hang Seng (-0.07%) and Kospi (-0.90%) are lower in trading this morning though.</p>
<p>Earnings yesterday were generally supportive in the US. Gilead Sciences, General Dynamics and Northrop Grumman in particular were some of the more notable beats to lead the gains, although after the closing bell Facebook tumbled 4% in extended trading after a disappointing quarterly report. With 288 companies in the S&amp;P 500 having now reported, earnings beats are unchanged versus Tuesday at 76% while sales beats have ticked up 1% to 51%. M&amp;A activity is also continuing to be supportive for markets on both sides of the pond at the moment. Bloomberg is reporting that $426bn of deals have been announced so far this quarter which, if it continues at the current rate, is set to pass the record for any third quarter set back in 2007 when $983bn of deals were made.</p>
<p>Yesterday’s data flow in the US came in the form of pending home sales for June which disappointed having slumped 1.8% mom during the month (vs. +0.9% expected), the first drop this year. Over in Europe we saw German consumer confidence print in line at 10.1 although there was a modest tick down in consumer confidence in France, falling to 93 (vs. 94 expected). In the UK June mortgage approvals data was supportive at 66.6k (vs. 66.0k expected) while net consumer credit was a touch ahead of expectations (£1.2bn vs. £1.1bn expected). Equity bourses closed broadly higher in Europe yesterday, with the Stoxx 600 (+1.02%), DAX (+0.34%) and CAC (+0.81%) all rising for the second consecutive session. Sovereign bond yields moved steadily higher meanwhile on the back of the generally more positive tone with 10y Bunds in particular finishing +2.7bps at 0.715%.</p>
<p>One event which will be worth keeping an eye on today is in Greece where the Syriza Central Committee is due to meet for the first time since the actual agreement was reached in what will likely be a tense session. It’s expected that the Central Committee is to decide the timing and logistics of an emergency congress on the back of the high number of lawmakers who didn’t back the agreement with the radical members of the committee likely to push for a congress immediately (and so aim to block the agreement). Tsipras has suggested he would want an emergency congress in September (so as to increase the chances of an agreement in the interim) with the possibility of a general election thereafter.</p>
<p>Taking a look at today’s calendar now, it’s going to be a fairly busy day for data and we start this morning in Germany with the July CPI and unemployment reports. Euro area confidence indicators for July are also expected. With the FOMC out of the way the focus this afternoon now turns to the US Q2 GDP reading and the three years’ worth of revisions which are also due to be released and which may partially address the recent historical pattern of weak growth in Q1. Market expectations are currently set at 2.5% for Q2 which is line with the forecast of DB’s Joe Lavorgna while the Atlanta Fed GDPNow model is forecasting for a 2.4% reading. Elsewhere we’ll also get the Core PCE print as well as initial jobless claims. On the earnings front the highlights include Time Warner, ConcoPhillips and Proctor &amp; Gamble.</p>
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http://www.zerohedge.com/news/2015-07-30/chinese-stocks-tumble-close-trading-causing-panic-us-gdp-be-revised-higher-seasonal-#comments8.5%BondChinaConsumer ConfidenceConsumer CreditContinuing ClaimsCopperCPICrudeCrude OilDeutsche BankFranceFutures marketGermanyGlobal EconomyGreeceGreenlightInitial Jobless ClaimsJim ReidNASDAQNikkeiOutput GapPersonal ConsumptionPrice ActionRANSquawkRBSReutersSaudi ArabiaShenzhenTime WarnerTwitterTwitterUnemploymentVolatilityThu, 30 Jul 2015 10:54:39 +0000Tyler Durden510691 at http://www.zerohedge.com4 Mainstream Media Articles Mocking Gold That Should Make You Thinkhttp://www.zerohedge.com/news/2015-07-29/4-mainstream-media-articles-mocking-gold-should-make-you-think
<p><a href="http://libertyblitzkrieg.com/2015/07/29/4-mainstream-media-articles-mocking-gold-that-should-make-you-think/"><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p>
<p><em>For those of you who have been reading my stuff since all the way back to my Wall Street years at Sanford Bernstein, thanks for staying along for the ride. I appreciate your support immensely&nbsp;considering that I essentially no longer write about financial markets at all, and for many of you, that remains your profession and primary area of interest.</em></p>
<p><em>There are many reasons why I stopped commenting on markets, but the main reason is that I started to recognize I wasn&rsquo;t getting it right. In fact, in some cases I was getting it spectacularly wrong. Whenever this happens, I try to isolate the problem and fix it. In this case there was no fix, because much of why I was no longer getting it right was rooted in the fact that my heart, soul and passion had moved onto other things. My interests had expanded, and I started a blog to express myself on myriad other matters I deemed important. Providing relevant market information needs intense focus, and my focus had shifted elsewhere. I recognized that&nbsp;I wasn&rsquo;t intellectually interested enough in centrally planned markets to provide insightful analysis, and so I stopped.</em><span id="more-25872"><em> </em></span></p>
<p>This doesn&rsquo;t mean I won&rsquo;t start up again. <strong>When central planners do lose control, I may indeed become far more interested in opining on such matters.</strong> Time will tell. In the interim, financial markets do still&nbsp;play an important role in the bigger picture of social, political and economic trends I passionately care about. The stability and increase in financial assets (stocks and bonds) is of huge importance to the propaganda machine, in particular keeping the non-oligarchic, non-politically connected 1% in line and believing the hype (see:&nbsp;<strong><a href="http://libertyblitzkrieg.com/2013/01/31/the-stock-market-food-stamps-for-the-1/" rel="bookmark" title="Permanent Link to The Stock Market: Food Stamps for the 1%">The Stock Market: Food Stamps for the 1%</a></strong>).</p>
<p>So while I won&rsquo;t claim to know when the paradigm shift will begin in earnest, I do rely on people who have gotten macro forecasts right, and there is no one better than <a href="http://www.armstrongeconomics.com/">Martin Armstrong</a>. Years ago, he was saying that nothing goes up in a straight line and that gold would experience a severe correction before beginning its real bull market. We are seeing his prediction unfold before our very eyes. What he also said is that as gold approached the $1,000 per/oz mark or even below, everyone would proclaim that &ldquo;gold is dead&rdquo; and start making comically bearish statements. <strong>In a nutshell, negative sentiment would plunge to levels not seen in years, if not more than a decade. We are starting to see this now.</strong></p>
<p><strong>Here are four mainstream media articles that provide some evidence we may be approaching a sentiment low. Some of them I&rsquo;m sure you&rsquo;ve seen, others perhaps not. What amazes me is how they&rsquo;ve all come out within the last two weeks.</strong></p>
<p><u><strong>1) From the Wall Street Journal:&nbsp;<a href="http://blogs.wsj.com/moneybeat/2015/07/17/lets-be-honest-about-gold-its-a-pet-rock/">Let&rsquo;s Be Honest About Gold: It&rsquo;s a Pet Rock&nbsp;</a></strong></u></p>
<p>Here are a few choice excerpts:</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Gold is supposed to be a haven amid hard times and soft money. So why, even as Greece has defaulted, the euro has sunk against the dollar, and the Chinese stock market has stumbled, has <strong>gold been sitting there like a pet rock?</strong></em></p>
<p>&nbsp;</p>
<p><em>Many people may have bought gold for the wrong reasons: because of its glittering 18.7% average annual return between 2002 and 2011, because of its purportedly magical inflation-fighting properties, because it is supposed to shine in the darkest of days. But gold&rsquo;s long-term returns are muted, it isn&rsquo;t a panacea for inflation, and it does well in response to unexpected crises&mdash;but not long-simmering troubles like the Greek situation. <strong>And you will put lightning in a bottle before you figure out what gold is really worth.</strong></em></p>
<p>&nbsp;</p>
<p><em>With greenhorns in gold starting to figure all this out, the price has gotten tarnished.<strong> It is time to call owning gold what it is: an act of faith.</strong> As the Epistle to the Hebrews defined it forevermore, &ldquo;Faith is the substance of things hoped for, the evidence of things not seen.&rdquo; Own gold if you feel you must, but admit honestly that you are relying on hope and imagination.</em></p>
<p>&nbsp;</p>
<p><em>Recognize, too, that <strong>gold bugs</strong>&mdash;the people who believe in owning the yellow metal no matter what&mdash;<strong>often resemble the subjects of a laboratory experiment on the psychology of cognitive dissonance.</strong></em></p>
<p>&nbsp;</p>
<p><em>So, if buying gold is an act of faith, how much money should you put on the line?</em></p>
<p>&nbsp;</p>
<p><em>Anything much above that is more than an act of faith; it is a leap in the dark. Not even gold&rsquo;s glitter can change that.</em></p>
</blockquote>
<p>Think about some of the words and phrases used in this WSJ article:</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;Pet rock.&rdquo;</em></p>
<p>&nbsp;</p>
<p><em>&ldquo;Greenhorns in gold</em> (greenhorn means&nbsp;a person who lacks experience and knowledge).<em>&rdquo; </em></p>
<p>&nbsp;</p>
<p><em>&ldquo;It is time to call owning gold what it is: an act of faith.&rdquo;</em></p>
<p>&nbsp;</p>
<p><em>&ldquo;Gold bugs</em>&nbsp;<em>often resemble the subjects of a laboratory experiment on the psychology of cognitive dissonance </em>(this is actually true in many ways).&rdquo;</p>
</blockquote>
<p><strong>Condescending as the entire article is to gold owners, he even goes so far to quote the Hebrew Bible!</strong></p>
<p>Moving on.</p>
<p><u><strong>2) From the <em>Washington Post</em>:&nbsp;<a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/25/gold-is-doomed/">Gold is Doomed</a></strong></u></p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>When you think about it, a bet on gold is really a bet that the people in charge don&rsquo;t know what they&rsquo;re doing. Policymakers missed yesterday&rsquo;s financial crisis, so maybe they&rsquo;re missing tomorrow&rsquo;s inflation, too. That, at least, is what a cavalcade&nbsp;of charlatans, cranks, and armchair economists have been shouting for years now, from the penny ads that run on the bottom of websites &mdash; did you know that the $5 bill&nbsp;<a href="https://twitter.com/ObsoleteDogma/status/624260384384516096" target="_blank">proves</a>&nbsp;the stock market is on the cusp of crashing? &mdash; to Glenn Beck infomercials and even hedge fund conferences. Indeed, John Paulson, who made more fortunes than you can count betting against subprime, has been piling into gold for six years now, because he&nbsp;<a href="http://video.cnbc.com/gallery/?video=3000183690#." target="_blank">thinks</a>&nbsp;&ldquo;the consequences of printing money over time will be inflation.&rdquo; They all do. Goldbugs act like the Federal Reserve&rsquo;s public balance sheet is a secret only they have discovered, and that it&rsquo;s only a matter of time until prices explode like they did in the 1970s United States, if not 1920s Germany.</em></p>
<p>&nbsp;</p>
<p><em>But economists do, for the most part, know what they&rsquo;re doing. Sure, they missed the crash coming in 2008, but that wasn&rsquo;t because they didn&rsquo;t&nbsp;understand how bank runs work. It was because they didn&rsquo;t understand that unregulated lenders had become vulnerable to runs. And the economists who haven&rsquo;t forgotten their history knew that this inflation fear mongering was all wrong too. Specifically,&nbsp;there&rsquo;s a difference between the central bank buying bonds, a.k.a. printing money, when interest rates are zero and when they&rsquo;re not. In the first case, money and short-term bonds both pay the same amount of interest &mdash; none &mdash; so, as&nbsp;<a href="http://krugman.blogs.nytimes.com/2013/04/11/monetary-policy-in-a-liquidity-trap/" target="_blank">Paul Krugman</a>&nbsp;has explained over and over again, printing one to buy the other won&rsquo;t change anything. Banks won&rsquo;t lend out any&nbsp;new money, and will just sit on it as a store of value instead. That&rsquo;s what happened when interest rates fell to zero in 2000s Japan, and it&rsquo;s what is happening now in the U.S., U.K., Japan, and Europe.</em></p>
<p>&nbsp;</p>
<p><em>It almost makes you feel bad for the goldbugs, until you remember that some substantial number&nbsp;of them are just trying to&nbsp;<a href="http://www.ritholtz.com/blog/2010/07/glenn-beck-goldline/" target="_blank">scare seniors</a>&nbsp;out of their money. But the ones who aren&rsquo;t really thought the 1970s showed that gold went up when inflation did, so the fact that gold was going up now meant inflation couldn&rsquo;t be&nbsp;far behind. They didn&rsquo;t understand that the price of gold doesn&rsquo;t depend on how much inflation there is, but rather on how much inflation there is&nbsp;relative to interest rates. So now that rates are rising, gold, as you can see below, is falling. Wait a minute, rates are rising? Well, yes.&nbsp;The Federal Reserve hasn&rsquo;t actually raised rates yet, but it has talked about it enough that markets have&nbsp;<a href="http://blogs.wsj.com/economics/2015/04/17/the-economy-has-slowed-because-the-fed-has-already-tightened/" target="_blank">reacted</a>&nbsp;as if it already did. That&rsquo;s been enough to make real rates&nbsp;<a href="http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield" target="_blank">positive again</a>.</em></p>
</blockquote>
<p>While I agree that many gold bugs do deserve the criticism they get, it&rsquo;s interesting to see the way in which the <em>Washington Post</em> demonizes them as:</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;J<em>ust trying to&nbsp;scare seniors&nbsp;out of their money.&rdquo;&nbsp;</em></strong></p>
</blockquote>
<p>But the purpose of the above article is less about demonizing gold bugs, and more about&nbsp;praising the existing system of crank central planners that no one other than starry eyed&nbsp;pundits and thieving oligarchs actually support (see:&nbsp;<a href="http://libertyblitzkrieg.com/2015/06/03/revolution-is-coming-the-top-20-responses-to-jon-hilsenraths-idiotic-wsj-article/" rel="bookmark" title="Permanent Link to “Revolution is Coming” – The Top 20 Responses to Jon Hilsenrath’s Idiotic WSJ Article">&ldquo;<strong>Revolution is Coming&rdquo; &ndash; The Top 20 Responses to Jon Hilsenrath&rsquo;s Idiotic WSJ Article</strong></a>).</p>
<p>Here are some examples:</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>But economists do, for the most part, know what they&rsquo;re doing.</em></strong></p>
<p>&nbsp;</p>
<p><strong><em><a href="http://krugman.blogs.nytimes.com/2013/04/11/monetary-policy-in-a-liquidity-trap/" target="_blank">Paul Krugman</a>&nbsp;has explained over and over again, printing one to buy the other won&rsquo;t change anything.&nbsp;</em></strong></p>
</blockquote>
<p>This&nbsp;story is far from over, as the Fed has yet to raise interest rates. Talk to me about victory when rates normalize.</p>
<p>Moving along to the next article:</p>
<p><strong><u>3) From <em>Bloomberg</em>:&nbsp;<span class="lede-headline__highlighted"><a href="http://www.bloomberg.com/news/articles/2015-07-28/gold-out-of-style-like-bell-bottom-trousers-signals-lower-prices">Gold Is Only Going to Get Worse</a></span></u></strong></p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The problem for gold isn&rsquo;t just that prices are dropping. For many,<strong> the metal also has lost its charisma.</strong></em></p>
<p>&nbsp;</p>
<p><em>Prices will drop to $984 an ounce before January, according to the average estimate in a Bloomberg News survey of 16 analysts and traders. That would be the lowest since 2009 and a 10 percent retreat from Tuesday&rsquo;s settlement. <strong>Speculators are shorting the metal for the first time since U.S. government data began in 2006</strong>, and holders of exchange-traded products are selling at the fastest pace in two years.</em></p>
<p>&nbsp;</p>
<p><em><strong>&ldquo;Gold is out of fashion like flared trousers: no one wants it,&rdquo;</strong> said Robin Bhar, an analyst at Societe Generale SA in London. &ldquo;It&rsquo;s not going to collapse, but we think it is going to be at a lower level in the not-too-distant future.&rdquo;</em></p>
<p>&nbsp;</p>
<p><em><strong>&ldquo;Gold is a weird relic of antiquity,&rdquo;</strong> said Brian Barish, who helps oversee about $12.5 billion at Denver-based Cambiar Investors LLC. &ldquo;It&rsquo;s not a commodity that has much fundamental demand. It&rsquo;s pretty, so people use it for jewelry. But it&rsquo;s unlike iron ore or oil, or copper, or corn. There&rsquo;s not specific end-use for it. People just like it, so it becomes a discussion about fervor.&rdquo;</em></p>
</blockquote>
<p>Let&rsquo;s once again highlight some of the terminology used.</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The metal also has lost its charisma</em></p>
</blockquote>
<p>So now it&rsquo;s magically turned into a human being as opposed to a pet rock.</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Speculators are shorting the metal for the first time since U.S. government data began in 2006</em></p>
<p>&nbsp;</p>
<p><em>&ldquo;Gold is out of fashion like flared trousers: no one wants it.</em></p>
<p>&nbsp;</p>
<p>&ldquo;Gold is a weird relic of antiquity.&rdquo;</p>
</blockquote>
<p>Finally, for the last article. This one takes on more of the tone from the WSJ article, basically just calling gold buyers imbeciles.</p>
<p><strong><u>4) From <em>Market Watch</em>:&nbsp;<a href="http://www.marketwatch.com/story/investors-need-to-consider-that-gold-may-fall-to-350-an-ounce-2015-07-29?siteid=rss&amp;rss=1">Two Reasons Why Gold May Plunge to $350 an Ounce</a>.</u></strong></p>
<div>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div>
<p><em>CHAPEL HILL, N.C. (MarketWatch) &mdash; Gold bugs, who have just begun to digest bullion&rsquo;s more than $100 drop over the past month, need to prepare for the possibility of an even bigger decline.</em></p>
<p><em>That, at least, is the forecast of Claude Erb, a former commodities manager at fund manager TCW Group, and co-author (with Campbell Harvey, a Duke University finance professor) of&nbsp;<a class="icon " href="http://ssrn.com/abstract=2078535" target="_new">a mid-2012 study that forecast a plunging gold price</a>. They deserve to be listened to, therefore, since &mdash; unlike many latter-day converts to the bearish thesis &mdash; they forecast a long-term gold bear market when it was only just beginning.</em></p>
<p>&nbsp;</p>
<p><em>You might think that, with gold now trading more than $500 lower than when the study was released, Erb would declare victory and leave well enough alone. But Erb is doing nothing of the sort. <strong>Earlier this week, he told me that the gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce.</strong></em></p>
<p>&nbsp;</p>
<p><em>Erb uses the five well-know stages of grief to characterize where the gold market currently stands. Those stages are denial, anger, bargaining, depression and acceptance, and he argues that the gold-bug community currently is in the &ldquo;bargaining&rdquo; stage.</em></p>
<p>&nbsp;</p>
<p><em>Erb imagines them saying the functional equivalent of: <strong>&ldquo;So long as gold stays above $1,000 an ounce, I&rsquo;ll go to church every Sunday.&rdquo;</strong></em></p>
<p>&nbsp;</p>
<p><em>Over shorter terms measured in years, according to their research, you must take seriously the possibility that gold won&rsquo;t just drop below $1,000 an ounce but, eventually, to a far, far lower price as well.</em></p>
</blockquote>
</div>
<p>Some choice quotes to think about:</p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce.</em></p>
<p>&nbsp;</p>
<p><em>Erb uses the five well-know stages of grief to characterize where the gold market currently stands. </em></p>
<p>&nbsp;</p>
<p><em>&ldquo;So long as gold stays above $1,000 an ounce, I&rsquo;ll go to church every Sunday.&rdquo;</em></p>
</blockquote>
<p><strong><u>This is pretty much peak condescension, </u>and once again, notice&nbsp;the religious imagery.</strong></p>
<blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Gold won&rsquo;t just drop below $1,000 an ounce but, eventually, to a far, far lower price as well.</em></p>
</blockquote>
<p><strong>I didn&rsquo;t write this article to &ldquo;call the bottom in gold&rdquo; or anything like that.</strong> I merely want to flag these four articles due to the hyperbolic nature of some of the statements made (they are exhibiting pretty much exactly the same behavior as the gold bugs they mock do). <u><strong>I do think that something is happening on the sentiment front that warrants we are closer to the bottom that the mid-stages of a bear market.</strong></u></p>
<p><em>While I certainly accept that gold prices could fall further from here, I don&rsquo;t think they will go anywhere near $350/oz, or $500/oz. If&nbsp;Claude Erb cares to make a public bet with me on that, he can find me <a href="http://libertyblitzkrieg.com/contact-mk/">here</a>.</em></p>
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http://www.zerohedge.com/news/2015-07-29/4-mainstream-media-articles-mocking-gold-should-make-you-think#commentsBear MarketBloomberg NewsCognitive DissonanceCopperFederal ReserveGermanyGlenn BeckGold BugsGoldbugsGreeceJapanJohn PaulsonKrugmanMartin ArmstrongNonePaul KrugmanWall Street JournalThu, 30 Jul 2015 00:15:00 +0000Tyler Durden510684 at http://www.zerohedge.comIf Varoufakis Is Charged With Treason, Then Dijsselbloem Should Be As Wellhttp://www.zerohedge.com/news/2015-07-29/if-varoufakis-charged-treason-then-dijsselbloem-should-be-well
<p>In the aftermath of this weekend's infamous leak of Yanis Varoufakis <a href="http://www.zerohedge.com/news/2015-07-27/full-audio-recording-varoufakis-drachma-plan-b">audio recording </a>with members of OMFIF in which the former finmin admitted to asset managers that in his tenure as a finmin he had engaged in preparations for a return to the Drachma, Greece has been gripped by a media frenzy debating whether Varoufakis will be charged with treason for daring to even contemplate how an exit from the EMU would take place.</p>
<p>To be sure, Varoufakis may have poured the initial gasoline on the fire when he <a href="http://www.zerohedge.com/news/2015-07-27/concerned-about-treason-charges-varoufakis-issues-public-statement-cloak-and-dagger-">admitted to Ambrose Evans-Pritchard </a>shortly after the recording surfaced that "the context of all this is that they want to present me as a rogue finance minister, <strong>and have me indicted for treason.</strong> It is all part of an attempt to annul the first five months of this government and put it in the dustbin of history." </p>
<p>His concerns were certainly justified: yesterday <a href="http://www.ekathimerini.com/200031/article/ekathimerini/news/supreme-court-prosecutor-takes-action-over-varoufakis-affair">Kathimerini reported </a>that Greek Supreme Court prosecutor Efterpi Koutzamani on Tuesday took two initiatives in the wake of revelations by former Finance Minister Yanis Varoufakis that he had planned a parallel banking system: she forwarded to Parliament two suits filed against the former minister last week by private citizens <strong>and she appointed a colleague to determine whether any non-political figures should face criminal charges in connection with the affair.</strong></p>
<blockquote><div class="quote_start">
<div></div>
</div>
<div class="quote_end">
<div></div>
</div>
<p>The legal suits were filed last week by Apostolos Gletsos, the mayor of Stylida in central Greece and head of the Teleia party, and Panayiotis Giannopoulos, a lawyer. Giannopoulos is suing Varoufakis for treason over his handling of talks with Greece’s creditors. Gletsos, for his part, accuses Varoufakis of exposing the Greek state to the risk of reprisals. </p>
<p>&nbsp;</p>
<p>As there is a law protecting ministers, the judiciary cannot move directly against Varoufakis. It is up to Parliament to decide whether his immunity should be lifted so he can stand trial. The first step would be to set up an investigative committee. </p>
<p>&nbsp;</p>
<p>A third suit was expected to go to Parliament after a group of five lawyers said they were seeking an investigation into whether any non-political figures should face criminal charges in connection with the Varoufakis affair. The charges would involve violation of privacy data, breach of duty, violation of currency laws and belonging to a criminal organization. It was the lawyers’ move that prompted Koutzamani to order an investigation.</p>
</blockquote>
<p>As a further reminder, during the telephone call Varoufakis detailed his plan for a parallel banking system, which would involve a childhood friend, a professor at Columbia University, to hack into the ministry’s online tax system. </p>
<blockquote><div class="quote_start">
<div></div>
</div>
<div class="quote_end">
<div></div>
</div>
<p>Varoufakis did not name the head of the General Secretariat for Information Systems, Michalis Hatzitheodorou, but the description of his role at the ministry and his background suggested he was referring to him.</p>
<p>&nbsp;</p>
<p>In a statement on Tuesday, Hatzitheodorou rebuffed as “absolutely false” reports regarding any type of intervention in the ministry’s information systems. The GSIS, and the current general secratary, have not planned much less attempted any type of intervention in its systems, the statement said. It added that the GSIS has enacted procedures with strict specifications which guarantee the security of personal data and make such interventions by anyone impossible.</p>
</blockquote>
<p>What makes matters confusing, is that the core allegation made by Varoufakis, namely that <em>the Troika controls Greece tax revenues and had to be sabotaged</em>, was strictly denied: <strong>European Commission spokeswoman Mina Andreeva on Tuesday described as “false and unfounded” Varoufakis’s claims that Greece’s General Secretariat for Public Revenues is controlled by the country’s creditors.</strong></p>
<p>In other words, if Andreeva is right, then Varoufakis' transgression of threatening to hijack the Greek tax system was merely hot air, and the former finmin is guilty of nothing more than self-aggrandizement.</p>
<p>On the other hand, if Greece does find it has a legal basis to criminally charge Varoufakis with treason merely for preparing for a Plan B, then it brings up an interesting question: if Varoufakis was a criminal merely for preparing for existing the Euro, then comparable treason charges should also be lobbed against none other than Varoufakis' nemesis - Eurogroup president and Dutch finance minister Jeroen Dijsselbloem. </p>
<p>Recall from the November 28 post that "<a href="http://www.zerohedge.com/news/2014-11-28/netherlands-germany-have-euro-disaster-plan-possible-return-guilder-and-mark">Netherlands, Germany Have Euro Disaster Plan - Possible Return to Guilder and Mark</a>", to wit:</p>
<blockquote><div class="quote_start">
<div></div>
</div>
<div class="quote_end">
<div></div>
</div>
<p><strong>The Dutch finance ministry prepared for a scenario in which the Netherlands could return to its former currency </strong>- the guilder. They hosted meetings with a team of legal, economic and foreign affairs experts to discuss the possibility of returning to the Dutch guilder in early 2012. </p>
<p>&nbsp;</p>
<p>At the time the Euro was in crisis, Greece was on the verge of leaving or being pushed out of the Euro and the debt crisis was hitting Spain and Italy hard. The Greek prime minister Georgios Papandreou and his Italian counterpart Silvio Berlusconi had resigned and there were concerns that the eurozone debt crisis was spinning out of control - leading to contagion and the risk of a systemic collapse.</p>
<p>&nbsp;</p>
<p>A TV documentary broke the story last Tuesday. <strong>The rumours were confirmed on Thursday by the current Dutch minister of finance, Jeroen Dijsselbloem, </strong>and the current President of the Eurogroup of finance ministers in a television interview which was covered by <a href="http://euobserver.com/news/126605">EU Observer </a>and <a href="http://www.bloomberg.com/news/2014-11-18/dutch-had-back-up-plan-to-reintroduce-guilder-dijsselbloem-says.html">Bloomberg</a>.</p>
<p>&nbsp;</p>
<p><strong>“It is true that [the ministry of] finance and the then government had also prepared themselves for the worst scenario”</strong>, said Dijsselbloem.</p>
</blockquote>
<p>This is precisely what Varoufakis was doing too.</p>
<blockquote><div class="quote_start">
<div></div>
</div>
<div class="quote_end">
<div></div>
</div>
<p>“Government leaders, including the Dutch government, have always said: we want to keep that eurozone together.<strong> But [the Dutch government] also looked at: what if that fails. And it prepared for that.”</strong></p>
<p>&nbsp;</p>
<p>While Dijsselbloem said there was no need to be “secretive” about the plans now, <strong>such discussions were shrouded in secrecy at the time to avoid spreading panic on the financial markets</strong>.</p>
</blockquote>
<p>Again, precisely like in the Greek scenario.</p>
<p>In fact, if throwing people in jail, may round up Wolfi Schauble as well:</p>
<blockquote><div class="quote_start">
<div></div>
</div>
<div class="quote_end">
<div></div>
</div>
<p>Jan Kees de Jager, finance minister from February 2010 to November 2012, <strong>acknowledged that a team of legal experts, economists and foreign affairs specialists often met at his ministry on Fridays to discuss possible scenarios.</strong></p>
<p>&nbsp;</p>
<p>“The fact that in Europe multiple scenarios were discussed was something some countries found rather scary. They did not do that at all, strikingly enough”, said De Jager in the TV documentary. <strong>“We were one of the few countries, together with Germany. </strong>We even had a team together that discussed scenarios, <strong>Germany-Netherlands.”</strong></p>
<p>&nbsp;</p>
<p>When the EU Observer requested confirmation from Germany, the German ministry of finance did not officially deny that it had drawn up similar plans, stating simply: “<strong>We and our partners in the euro zone, including the Netherlands, were and still are determined to do everything possible to prevent a breakup of the eurozone.” </strong></p>
<p>&nbsp;</p>
<p>* * * </p>
<p>&nbsp;</p>
<p>This is quite a revelation. At that time the German finance minister Wolfgang Schauble had said that the Euro could survive without Greece. Whether it could survive without the Dutch is another matter entirely.</p>
</blockquote>
<p>Fast forward 3 years when Greece, too, was making preparations for "preventing the breakup of the eurozone" in doing precisely what Schauble wanted as recently as three weeks ago: implementing a parallel currency which would enable Greece to take its "temporary" sabbatical from the Eurozone. </p>
<p>So one wonders: where are the legal suits accusing Dijsselbloem and Schauble of the same "treason" that Varoufakis may have to vigorously defend himself in a kangaroo court designed to be nothing but a spectacle showing what happens to anyone in Europe who dares to give Germany the finger, <a href="http://www.zerohedge.com/news/2015-03-16/varoufakis-latest-fiasco-finmin-claims-middle-finger-germany-clip-fake-germany-disag">either literally </a>or metaphorically.</p>
<p>The answer: nowhere, and they will never appear, because if Varoufakis is indeed sued it will not be because he did something that other much more "serious" Eurocrats haven't considered or done before, but simply to crucify the Greek and make him into a dramatic example for any other "peripheral" (or even core, <a href="http://www.zerohedge.com/news/2015-06-25/forget-grexit-madame-frexit-says-france-next-french-presidential-frontrunner-wants-o">ahem "Madame Frexit</a>") European who would even consider taking a comparable action on their own and pushing Europe's artificial, and now expiring, monetary union to the edge of collapse.</p>
<p>Then again, considering just how badly Europe misjudged the third season of the Greek bailout tragicomedy, it may want to be careful: the last thing it wants is to create a martyr against what increasingly more are calling a fascist oligarchy operating, conveniently enough, out of Belgium, Frankfurt and Berlin, one whose next item on the agenda is taking advantage of the Greek crisis and finally doing away with European state sovereignty altogether handing over control of Europe to a "parliament", one which if the ECB is any indication, will also be run by a few Goldman bankers.</p>
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http://www.zerohedge.com/news/2015-07-29/if-varoufakis-charged-treason-then-dijsselbloem-should-be-well#commentsB+BelgiumCreditorsEurozoneEvans-PritchardGermanyGreeceItalyNetherlandsNoneSilvio BerlusconiWed, 29 Jul 2015 20:53:03 +0000Tyler Durden510683 at http://www.zerohedge.comTsipras Threatens Snap Elections As Syriza Rebellion Threatens To Derail Bailouthttp://www.zerohedge.com/news/2015-07-29/tsipras-threatens-snap-elections-syriza-rebellion-threatens-derail-bailout
<p>On Tuesday <a href="http://www.zerohedge.com/news/2015-07-28/greek-economy-faces-total-collapse-doctors-flee-retail-sales-plunge-70">we documented</a> the rapid collapse of the Greek economy. According to data presented at an extraordinary meeting of the Hellenic Confederation of Commerce and Entrepreneurship, retail sales have fallen 70%, while the The Athens Medical Association recently warned that 7,500 doctors have left Greece since 2010.&nbsp;</p>
<p>To be sure, assigning blame for the economic malaise is difficult as it’s still largely unclear whether internal structural problems or externally imposed belt tightening deserve the lion’s share of the blame, but there certainly does seem to be a growing consensus among impartial observers that creditors’ insistence on the implementation of still more austerity in the middle of what amounts to a depression may be a fool’s errand - especially with capital controls serving to constrain economic activity.&nbsp;</p>
<p>It is against this backdrop that Greek PM Alexis Tsipras will attempt to pass a third set of prior actions through parliament - this will be the first such vote to take place with representatives of the "Quadriga" on the ground in Athens. As we noted on Tuesday, "if creditors aren't satisfied with the progress by August 18 (i.e. if for any reason Tsipras doesn’t manage to get the third set of bailout prerequisites by lawmakers), then paying the ECB on August 20 won't be possible and then it's either tap the remainder of the funds in the EFSM (which would require still more discussions with the UK and other decidedly unwilling non-euro states) or risk losing ELA which would trigger the complete collapse of not only the economy but the banking sector and then, in short order, the government. And through it all, the PM is attempting to beat back a Syriza rebellion (which will only be exacerbated by the upcoming vote on the third set of measures) while convincing the opposition that he's not secretly backing the very same Syriza rebels in their attempts to forcibly take the country back to the drachma."&nbsp;</p>
<p>On Wednesday, Tsipras spoke out about the new bailout "deal", debt re-profiling, the referendum, and party politics in an interview with Sto Kokkino radio station.&nbsp;</p>
<p>As Bloomberg reports, the Prime Minister "says that his mandate was to stop destruction of Greece [and that] things have changed" for the country and for Syriza. "The Greek people voted 'no' to a bad deal, they did not vote for an exit from the euro. Now some people are trying to manipulate the results," he continued.</p>
<p>Tsipras went on to accuse creditors of not negotiating in good faith, noting that the "quartet" of institutions wasn’t independent. <strong>As for the referendum call, Tsipras says he "had no other choice" and that the plebiscite was "high risk."</strong> As for abandoning the Greek "no" vote, Tsipras appears to have laid the blame at the foot of EU officials, saying it was "creditors [who] decided to shut down Greek banks" (the implication being that it was the bank closure and attendant economic pain which forced his hand in Brussels). Finally, the PM insists on playing up debt relief as something that was extracted from creditors during bailout talks (as opposed to something that was agreed to later once even Germany realized that without some manner of re-profiling, Greece’s situation was utterly hopeless).<strong> "We got a commitment for debt relief, which will take place after the first review of the program, in November," the PM said.&nbsp;</strong></p>
<p>Here are a few more notable quotes from the interview:</p>
<blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Tsipras: our outmost priority was to avert humanitarian crisis. We never asked people to vote for drachma in referendum</p>
<p>— Chrisostomos (@LoukasChris) <a href="https://twitter.com/LoukasChris/status/626342835080593408">July 29, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Tsipras: collective decisions must be followed by all MPs or hand back their seat</p>
<p>— Chrisostomos (@LoukasChris) <a href="https://twitter.com/LoukasChris/status/626340362689376256">July 29, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Tsipras: Syriza still not a whole party.</p>
<p>— Chrisostomos (@LoukasChris) <a href="https://twitter.com/LoukasChris/status/626339502190145536">July 29, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Tsipras: mistakes were made, but proud for the past 6 months. Difficult road ahead to get most for people's interests</p>
<p>— Chrisostomos (@LoukasChris) <a href="https://twitter.com/LoukasChris/status/626345436383707136">July 29, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><p>But for many Syriza lawmakers, the time for rhetoric has long since passed and indeed, it now appears that the party will not wait until after the third bailout is formally in place to call a party conference. Here’s <a href="http://www.ekathimerini.com/200032/article/ekathimerini/news/syriza-to-decide-next-step-in-new-meeting">Kathimerini</a>:</p>
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<p><strong><em>SYRIZA’s central committee is due to hold an emergency meeting Thursday in an attempt to find a way to settle the growing rift within the party over whether the government should agree to a third bailout or not.</em></strong></p>
<p>&nbsp;</p>
<p><strong><em>The second meeting Tuesday of the political secretariat in two days resulted in a decision to call a gathering of the central committee after several SYRIZA officials belonging to the party’s radical left wing called for the government not to pursue negotiations with Greece’s lenders but to follow an "alternative" path.</em></strong></p>
<p>&nbsp;</p>
<p><em>Prime Minister Alexis Tsipras spoke at Monday’s meeting of the political secretariat and insisted that the government has no other viable option than to agree a new bailout with the institutions.&nbsp;</em></p>
<p>&nbsp;</p>
<p><em>He proposed holding an emergency SYRIZA congress, probably in September, to allow party members to debate the issue.</em></p>
<p>&nbsp;</p>
<p><em>However, the party’s Left Platform, led by ex-Energy Minister Panayiotis Lafazanis is pushing for the congress to be held now, before a third bailout has been agreed.</em></p>
<p>&nbsp;</p>
<p><em>The central committee members will have to decide whether they will accept either of these options or whether there should be a ballot of SYRIZA members to decide what should be done.</em></p>
</blockquote>
<p>Meanwhile, creditors are "pleased" with how "cooperative" Greece is being now that they have been thoroughly humiliated and subdued (which recalls what the <a href="http://www.zerohedge.com/news/2015-07-28/german-economic-council-backs-exit-uncoooperative-eurozone-members">German Economic Council said</a> on Tuesday about "uncooperative" states). "The teams from the institutions are now already on the ground in Athens since Monday and the talks have now been ongoing for the last couple of days," an EU Commission spokesperson said on Wednesday, adding that <strong>Brussels is "satisfied with the smooth and constructive cooperation with the Greek authorities and that should allow us to progress as swiftly as possible."</strong></p>
<p>But as should be abundantly clear from the above, and as we and others have pointed out on quite a few occasions since Alexis Tsipras left Brussels on July 13, there’s something very odd about leaving the implementation of an unpopular bailout program to the political party from which the staunchest opposition emanates. </p>
<p>The <a href="http://www.zerohedge.com/news/2015-07-24/syriza-rebels-planned-ransack-greek-mint-seize-cash-reserves-arrest-central-bank-gov">alleged plot</a> to seize the country’s currency reserves hatched in secrecy by Lafazanis only serves to reinforce the suspicions not only of creditors, but of the very same opposition lawmakers who helped Tsipras secure the necessary votes to pass the first two sets of prior actions.&nbsp;</p>
<p>Put simply, there seems to be a very real possibility that the Syriza rebellion will gather enough steam in the coming weeks to materially derail discussions. This is then a race - Tsipras needs to formalize the new program before Lafazanis (and perhaps Varoufakis) foment enough discontent to make a meaningful push to head off implementation. </p>
<p>And with that, we’ll close with the following sound bites from Kathimerini which sum up the situation quite nicely.</p>
<blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en"><a href="https://twitter.com/hashtag/Tsipras?src=hash">#Tsipras</a>: we are carrying a bomb right now, let's deactivate it first, then talk <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a></p>
<p>— Kathimerini English (@ekathimerini) <a href="https://twitter.com/ekathimerini/status/626345357966974976">July 29, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en"><a href="https://twitter.com/hashtag/Tsipras?src=hash">#Tsipras</a> says SYRIZA should hold party congress early September after agreement with lenders sealed in August <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a></p>
<p>— Kathimerini English (@ekathimerini) <a href="https://twitter.com/ekathimerini/status/626345163745574912">July 29, 2015</a></p></blockquote>
<script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en"><a href="https://twitter.com/hashtag/Tsipras?src=hash">#Tsipras</a>: If I do not have parliamentary majority, I will have to call snap elections <a href="https://twitter.com/hashtag/Greece?src=hash">#Greece</a></p>
<p>— Kathimerini English (@ekathimerini) <a href="https://twitter.com/ekathimerini/status/626344588844879872">July 29, 2015</a></p></blockquote>
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http://www.zerohedge.com/news/2015-07-29/tsipras-threatens-snap-elections-syriza-rebellion-threatens-derail-bailout#commentsCreditorsGermanyGreeceWed, 29 Jul 2015 11:41:18 +0000Tyler Durden510641 at http://www.zerohedge.com